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Marina

How Is House Price Inflation Measured?

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Despite endless discussions on why there should, might or will be a HPC, I have never really seen a detailed analysis or explanation of how house price inflation is measured.

They all come out with an average price of a house. Presumably the Land Registry's average price is the average price of every house that sold within a specified period?

Whereas the Halifax and Nationwide - what do their averages mean?

Average of the valuations of houses they are providing mortgages on?

Average asking price of houses they are providing mortgages on?

Surely the only true figure is the price that a house sold for in one year compared to another - assuming the house is still identical.

There are so many variables in the figures that are published - it is hard to discern any meaning from them.

How do new build flats that go on the market for £235k and sell for £200k affect the figures?

Does anyone know when someone says 'house prices went up 1% last month' - what are they comparing?

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Guest rigsby II

They all come out with an average price of a house. Presumably the Land Registry's average price is the average price of every house that sold within a specified period?

I haven't got a clue either and I think a lot of the LR is either dodgy or takes no account of what has happened in the intervening period.

Take this house, on the face of it it has gone from £61,500 to £308,000 in the space of a few years.

http://www.mypropertyforsale.co.uk/property2688.html

http://www.houseprices.co.uk/e.php?q=30%2C...orth%2C+DN9+1EY

Anyway you look at it you think Jeeze, it can't have gone up 5 times in 3 years can it ?

So either the figures are wrong, the plot was split, or redeveloped or something else, but these just get put into the sausage machine and come out as a figure that will simply show a rise of 500%, the figures have to be taken with a pinch of salt unless its absolutely like for like comparison - and nethouseprices dont take account of that.

Anyway £308,000 - Christ Amighty - and they are emigrating and can't sell either.

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I have never really seen a detailed analysis or explanation of how house price inflation is measured.

Don't you know anything Marina? There is no such thing as inflation when it comes to house prices. Remember how they used to say "women don't perspire, they glow". Well that's how it is with housing. Yes house prices rise (never fall mind you), but inflate? Are you crazy? Besides, House-price inflation has officially been declared an oxymoron by the Treasury ever since house prices were removed from the inflation figures by my dept.

Yours, Gordie Brown

On a more serious note, in its .Quarterly Inflation Report (aug05), the Bank of England refers to Asset Prices (section 1.1) as follows:

The housing market

According to the lenders’ indices, the level of house prices has

been broadly flat since the beginning of 2005 (Chart 1.6).

Estate agents’ surveys, such as those from the Royal Institution

of Chartered Surveyors (RICS), appear to have been more

bearish

In other words, their view of HPI is based on all the usual suspects.

Edited by Sledgehead

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Despite endless discussions on why there should, might or will be a HPC, I have never really seen a detailed analysis or explanation of how house price inflation is measured.

I think this is an important issue.

After all if you don't know for each index what data it uses and how it's manipulated, how can you interpret the results :)

Have a look at the following links;

A Guide to House Price Indices is a very nice summary of the data, method, advantages/disadvantages of various HPI's.

The development of a land registry-based national house price index is a pdf from the Office for National Statistics / Land Registry about the conception the Land Registry House Price Index. Again it compares other types of indexes, but contains more details and maths B)

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  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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