Tuesday, Sep 16, 2008
Why the Land Registry doesn't tell the true picture
Motley Fool: Who can you trust on house prices? See comment from Indianopolis
The major problem with the Land Registry data is the sample size. This does not seem to have been picked up much in the press. The LR uses a methodology that they term 'repeat sales regression'. Monitoring when a property is exchange twice and recording the change between the two dates. This is all fine in practice but the LR has only been recording sale price in the registry since around 2000, which they estimate is around 2% of the total housing stock. This is already a low sample but on top of this for a property to be registered in the index it has to have been exchanged twice between 2000 and today. In a market when numbers of transactions have collapsed by around 70%, the LR sample size each month must be incredibly low to the extent that it's statistically meaningless.
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