Land Registry To Launch Own House Price Index!

[HousePriceLottery]

Breaking news spotted on the Priced Out site...

http://www.politics.co.uk/press-releases/d...#036;455646.htm

Land Registry launches new house price index

Tuesday, 24 Oct 2006 16:05

This month (31 October 2006) Land Registry launches the first official, independent House Price Index (HPI).

Using Land Registry’s comprehensive property data, the new seasonally-adjusted index will appear monthly, making average house prices available at national, regional, county and London borough level.

As the HPI measures average price changes in repeat sales on the same property, the price change on a flat in Mayfair is not compared with the change on a flat in the Old Kent Road. This gives a like for like comparison, making it the most accurate index currently available.

Ted Beardsall, Land Registry Deputy Chief Executive, said:

“The Land Register provides the most complete set of house price data for England and Wales. We believe that our new House Price Index is more timely and will become the authoritative and most accurate reflection of average house price movements in the country.”

The Land Registry dataset is a record of all residential property transactions made in England and Wales since April 2000. At present it contains details on over seven million sales. Of these, 1.3 million are identifiable matched pairs, providing the basis for the repeat-sales regression analysis used to compile the index.

ENDS

Notes to editors

1. The new House Price Index will be available to download from 00.01 hours at www.landregistry.gov.uk on the 20th working day of each month.

2. The HPI is compiled by Calnea Analytics Limited. Further information on the methodology can be found by visiting www.calnea.com

3. Land Registry will continue to publish its quarterly residential property price reports, based on mean averages, on its website.

4. With the world’s largest property database of over 20 million titles, Land Registry underpins the economy by guaranteeing ownership of many billions of pounds worth of property. Around £1million worth of property is processed every minute in England and Wales.

5. As a government department established in 1862, executive agency and trading fund responsible to the Secretary of State for Constitutional Affairs and Lord Chancellor, Land Registry keeps and maintains the Land Register for England and Wales. The Land Register has been an open document since 1990.

6. For further information about Land Registry, please visit www.landregistry.gov.uk

A very interesting development!

Edited October 24, 2006 by HousePriceLottery

[PropertyGuru]

that's actually a VERY interesting development!

[Realistbear]

Hmmmmmmmmmmmm, a totally government controlled market tracker?

Could Gordon have called the LR boss over for a chat to tell him that house prices are, and will always rise. Look into my eyes, look into my eyes, don't look around, house prices are, and will always go up. Your coming out now....

[BrickingIt]

mmmmmmmmmmmm.........interesting conspiracy theory.

Edited October 24, 2006 by BrickingIt

[assetpriceinflation]

So I guess that they are going to use data from repeat sales divided by number of days between sales then annualised. As we have seen massive HPI since their records began in 2000 their Index is going to be overly optimistic. As sales stagnate their index will similarly fail to reflect any subsequent fall in market value (asking prices). I currently remain sceptical.

[HousePriceLottery]

I predict two camps on here in response to this;

1. It's an acknowledgement that current surveys are biased(!)

2. It's a whitewash by the government to hide falling prices

I'm hoping it's 1. Let's hope they crack down on new build incentives rigging the prices too.

[OzzMosiz]

Is the LR government controlled? If so, then this is definitely a way for them to fudge it.

[subsidiser]

I predict two camps on here in response to this;

1. It's an acknowledgement that current surveys are biased(!)

2. It's a whitewash by the government to hide falling prices

I'm hoping it's 1. Let's hope they crack down on new build incentives rigging the prices too.

It could be a whitewash by the government to hide rising prices.

[frugalista]

What's the difference between this new index and the ODPM index, which was based on the LR?

frugalista

[Willy Weasel]

I find the slagging off of the various indices utterly incomprehensible. Everyone on here uses the indices to show houses are overpriced and to show we are due a crash as though the line on the graph is some fundamental truth and then in the next breath say that all the indices are biased VI spin.

Either the indices are accurate or they are not. If they are not accurate then why use them as a predictor of the crash?

[HousePriceLottery]

I find the slagging off of the various indices utterly incomprehensible. Everyone on here uses the indices to show houses are overpriced and to show we are due a crash as though the line on the graph is some fundamental truth and then in the next breath say that all the indices are biased VI spin.

Well I'm not a huge VI conspiracist subscriber but I do have reservations that the majority of home buyers base their pricing expectations on indices compiled by commericial entities with a clear incentive to avoid bad news.

Either the indices are accurate or they are not. If they are not accurate then why use them as a predictor of the crash?

A more salient question though is why do the government feel the need for an independent survey...

1. Do they think the commercial ones are inaccurate on some fashion

2. Do they want to excercise influence over the results

3. Do they just like chucking money for no reason

What's the difference between this new index and the ODPM index, which was based on the LR?

The ODPM is pretty much gone replaced by the DCLG.

I suspect this move is to try and brand the indice as Independent which a DCLG produced indice would never seem to be.

[brassfarthing]

Well I'm not a huge VI conspiracist subscriber but I do have reservations that the majority of home buyers base their pricing expectations on indices compiled by commericial entities with a clear incentive to avoid bad news.

A more salient question though is why do the government feel the need for an independent survey...

1. Do they think the commercial ones are inaccurate on some fashion

2. Do they want to excercise influence over the results

3. Do they just like chucking money for no reason

The ODPM is pretty much gone replaced by the DCLG.

I suspect this move is to try and brand the indice as Independent which a DCLG produced indice would never seem to be.

It's not "the government" that are producing the survey. The LR is a public body but it's not "the government". With all the different surveys produced every month, I think it has to be a good thing that we are going to get a more authoritative one.

I don't believe the stats used in these various surveys are fabricated, but the stats may well not be useful (e.g. asking prices rather than selling prices, or mortgage offers rather than mortgage take-up). Also, it's the spin that's put on the results that's at fault, not the stats. VIs, whether bears or bulls, can edit the truth as much as they need to fuel their own delusion.

It has to be a good thing to have a comprehensive LR survey based on actual price changes on the same properties. I don't know what it will show, but if it's a true picture, whether good or bad news, let's have it. What is predictable however, is that people on either side of the argument will still try to spin it!

[HousePriceLottery]

It's not "the government" that are producing the survey. The LR is a public body but it's not "the government". With all the different surveys produced every month, I think it has to be a good thing that we are going to get a more authoritative one.

Ah now come on, you don't think this was a government decision for the survey to be instituted? :-)

BTW I'm right with you on it being a good thing. Particularly if it's a body open to public scrutiny.

Edited October 24, 2006 by HousePriceLottery

[HousePriceLottery]

What's the difference between this new index and the ODPM index, which was based on the LR?

Aha the answer is in the article.

The DCLG was a mix manipulated (sorry I mean, grits teeth, "adjusted") monster just like the Hailfax and Nationwide.

This is comparing the difference in prices between the same properties. The question is will the types of properties which continue to sell be representative of the whole?

I might add on that basis it will exclude new build initial sales too presumably?

Done some more research and the analysis is being provided by Calnea www.calnea.com, these are the guys behind the mouseprice.com website.

Edited October 24, 2006 by HousePriceLottery

[spline]

Interesting ....

The “new” ODPM (DCLG) index uses a hedonistic regression for the mix-adjustment and is based on a sample of mortgage completions - so lags the sale agreement by about 9 weeks. It’s not seasonally adjusted, and is calibrated to reflect the price of a typically transacted house – usually close to the mean of the LR transaction data.

The FT index, FTHPI-MA, is based on the LR data and adds the mix-adjustment and seasonal adjustment – but it can’t deal with the inherent delay of about 15 weeks and poor timeliness of the LR sale registration data – so it morphs into a combined index for the “most recent months” and weights additional inputs from mortgage approvals and other sources. It also adds smoothing.

This new one from the LR looks like a “repeat sales regression” type, so should be interesting as we don’t have one of these yet. But that alone can’t solve the problem of the excessive delay and poor timeliness – that needs something like the FTHPI combined approach. For timely data we just take Rightmove’s word for it , followed by Haliwide, or look at the mortgage approval for house purchase data.

Edited October 24, 2006 by spline

[brassfarthing]

Ah now come on, you don't think this was a government decision for the survey to be instituted? :-)

To be honest, no, I've no reason to think it was a "government decision", whatever that means!

The LR is publicly funded but pretty autonomous. I don't know where the initiative came from, but I've no reason to think that it's part of some conspiracy. Dodgy governments usually try to conceal information, not make it available.

[Smell the Fear]

Two points:

1) the new index will not take account of improvements made to houses. As the market seizes up and fewer can afford to move to bigger properties, many are extending. If they then sell their larger house at a higher price than they paid for it, hey presto HPI. But it won't be comparing like with like.

2) New builds. The incentive-hiding could blow up in their face as false high prices not reflecting the true lower cost will then look like a large fall if the property is later sold at a true market value.

[HousePriceLottery]

2) New builds. The incentive-hiding could blow up in their face as false high prices not reflecting the true lower cost will then look like a large fall if the property is later sold at a true market value.

Now that I like.

[spline]

Yup, no silver bullet here ...

Robert Wood's 2005 article “A comparison of UK residential house price indices”, BIS Papers No 21, pp212-227 does a good job of explaining the problems with measuring house prices and how the different indices try balance the issues – PDF version, see link below.

House Price Bibliography + collected articles:

http://www.houseprices.uk.net/directory/an...ibliography_16/

Edited October 24, 2006 by spline