House price statistics are often in the news right now.

The headline stats report incredible times in the property market. They report seemingly unbelievable rates of house price rises, and new records in price levels, in almost every area of the country.

But the hard-hitting headlines often cause us to overlook an important point: Are the statistics behind them all that accurate in the first place? Could they be misleading to some extent?

Let’s delve behind the statistics and see how they are actually compiled.

First the UK House Price Index or UK HPI which is calculated by the ONS from data produced by HM Land Registry. This is widely regarded as being the leading index of house prices. It’s published around the middle of each month.

But what issues might there be with this data?

* It’s always out of date. For example, the average house price published in February was calculated from December sales completions. And, those prices could have been agreed anything from a few weeks before to many months before.

* The data is based on actual sales prices and not asking prices. These might just have been the same but most likely were not. By exactly how much depends on the direction of the market at the time.

* The house prices quoted are based on averages. But not every area is average. Some areas have lots of small properties and others have lots of large properties. Some areas have a huge volume of sales and others very few.

* Average house prices are presented for each local council district. But local authority boundaries in the UK are pretty random and don’t tie up with individual local areas very well. For example, the Leeds local authority area has some of West Yorkshire’s most expensive property areas and some of the cheapest. The data for Manchester covers just the City of Manchester area – a much smaller area than what most people think of as Manchester.

These are just a few anomalies. HM Land Registry don’t hide any of this by the way. They make it quite clear how the figures are compiled and what the limitations are . Although that’s rarely noted in press reports on property prices.

So what about other widely used and reported house price statistics?

The House Price Indices from the Nationwide Building Society use figures from their mortgage lending on owner-occupied homes. It is then mix-adjusted based on a representative house. Again, they’re very clear about how the data is calculated.

But not everybody takes a mortgage with Nationwide. And not every property purchase involves a mortgage at all.

The Halifax House Price Index uses a standardised house price too. The ins and outs of how it is compiled are pretty complicated and run to several pages. Find out more here.

The Rightmove House Price Index takes a totally different angle. It calls itself the leading indicator of residential property prices in England, Scotland and Wales. But it points out that this is based on a monthly sample of residential property asking prices. Again asking prices are very often quite different from selling prices. Find out more here.

What’s important to know about house price statistics?

Basically, whichever statistic you read it is probably not all that accurate as a guide to house prices. Just because a particular index says the average house price in your area is (or was, several months ago) £280,000 doesn’t mean you should ask £280,000 for your average house in that area. In fact, you almost certainly shouldn’t.

It’s important to point out that we’re not doubting the credibility of these indices. All of them use good quality original data which is no doubt carefully prepared by statistical experts. They are probably the best that can be done in the circumstances. But by their very nature the statistics are problematic. Although the creators of these indices point out the drawbacks press reports on the latest house prices don’t always mention that. And it could potentially lead house buyers and sellers to think house prices are higher, or lower, than they actually are.

How then, might you get a more accurate view of the current value of your house? Even in these days of big data the answer is, probably, to rely on a good fashioned method – and take advice from an estate agent. They will (or should) use data from the various indices of house prices and values and then combine it with their own market knowledge to come up with the most accurate valuation.

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