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Land Registry July-sept 2005 - Quick Analysis

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A quick technical analysis of the LR Sep/05 figures to explain how a small change in the shape of the market has priduced an apparent rise in prices – based on Table 7 of the report.

First, some notation to set things up, so let’s define rho(p) as the transaction volume per unit price and T the total number of transactions. Obviously we now have

T = Integral rho(p)*dp

and the average price is given by the integral over all prices

<P> = Integral rho(p)*P*dp / T

Now define a non-dimensional density rho_hat(p) = rho(p)/T and simplify the price integral

<P>=Integral rho_hat(p)*p*dp

The ‘shape’ of the market is shown by the rho_hat(p) densities for 2004 and 2005 - this is plotted below and shows the structural changes over the year quite nicely.


And doing the integrals with approximate bins (Table 7) as a check gives the following [LR quoted in square brackets] – so this simple analysis agrees with the LR quoted rises quite closely. :)

<P>_Jul_Sep_2004 = £188,788 [187,971]

<P>_Jul_Sep_2005 = £195,244 [194,589]

YoY % = +3.42% [3.52]

The changes 2004 to 2005 are a retreat in sub-£60k sales and a structural adjustment around the £120k stamp duty mark. The market shape above about £160k is relatively unchanged, although transactions are down overall. Net effect of the changes is a +3.5% rise in the average as demonstrated above.

Edited: Added the cumulative transaction plot to show changes to median and percentile prices


Edited by spline

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Nice one Spline, you've put in the numbers/graphics to the comments I made on the other LR thread - somebody has bid up the crud at the bottom end or the crud at the bottom end isn't selling at anything like the volume it was in 2004 with structural falls in teh nmber of properties selling in the sub-£60k mark.

Looking at the numbers of transactions around those levels I think this is the last time that there will one-off adjustment upwards of the LR index thanks to some truly dreadful property/locations maving from valuations of as little as a few thousand to £10k's.

Interesting that the 120K stamp duty effect is there too.

Edited by OnlyMe

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Your excellent graph also shows that, while the MEAN average has risen, the MODE average (and perhaps the median, too) has fallen.

Wouldn't it be good if all the various house price indicators reported on MEDIAN rather than MEAN house prices - it would make the figures much more person-friendly.

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Guest consa

This is the reality of what has happened, although distorted it shows the true gap between buyers and sellers and the percentage falls and rises

Land Registry

Q2 2005 is £184,924

Q3 2005 is £195,244


April £197,539

May £198, 147

June £198,642

Average asking price Q2 = £198,109

July £196,649

August £192,282

Sept £195,407

Average asking price Q3 = £194,779

-6.65% Q2 2005

+0.2% Q3 2005

So you see nothing to worry about there.

PS. RM figure is down approx 4K average on the quarter,

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