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Biased House Price Indices...

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I've been confident, in at least one of the areas in which I am interested, that house prices have fallen considerably... despite the mainstream indices failing to reflect this reality. I can be absolutely confident that prices are falling where, for example, I see many examples of houses selling in 2014 for less than the exact same house sold in 2006. This left me wondering if it is possible to define house price indices more relevant to house buyers.

By complete fluke, I stumbled on this today:


I wonder, how difficult would it be to define an HPC house price index? Perhaps an index that is founded on sales of the same property several years apart? Perhaps multiple indices segregating the data geographically?

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I was thinking about using something more sophisticated... Essentially, houses are 'priced' by looking for 'similar' properties and establishing a trend. While I have no absolute ideas about what constitutes 'similar' - I feel quite confident that a 'national average' can be improved upon.

My refined idea: perhaps what's needed is a tool to estimate house prices from real Land Registry transaction data... It would be great to be able to say "Here are 100 similar properties... Extrapolate a price biased towards the prices from these records." I like the idea that the tool could be independent of the vested interests that may skew official 'valuations' - where the customer buying the valuation is always looking for the highest valuation. If one got similar results for a wide range of different definitions of 'similar' - one could gain confidence in the estimate.

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