It seems that the UK Statistics Authority, which collects data and disseminates figures on just about everything you care to think of, wants to review the state of the many UK house price indices.
There are many sources that publish their own index. Lenders such as Halifax and Nationwide, the Royal Institution if Chartered Surveyors, Acadametrics, Hometrack and many larger estate agents. This is on top of the two government agencies that produce similar data, the Communities & Local Government department and the Land Registry.
The aim of the review I suppose would be to try and either identify which should be the more ‘official’ version or try and invent a new one. Maybe an amalgamation of all the more important ones with weighting etc.
The problem is of course that each index is based on slightly differing criteria so that a direct comparison is not possible. They can also produce contrasting results, one showing the market strong and robust another that it is weak and failing.
Not only are the indices all taking the raw data from different points in the process they may also be geographically or customer base biased. For example, just measuring property asking prices in Wiltshire will provide starkly different results from final sale data in the same county. There is also the time lag, asking prices give you a rough guide now, mortgage applications data comes a bit later and right at the end way after the event comes the Land Registry figures (arguably the most accurate). So it would be like trying to decide which supermarket to use as the nationwide basis of today’s price of a tin of beans.
Now, one can see why the government might find a ‘single unified theory of house price everything’ as a useful tool. It could then be used as part of the Bank of England deliberations on inflation etc. And off course no future government would want to tinker with the mechanism in the future for purely political reasons would it? But there comes a balance of the need for up to date information to make an assessment of the market. Can you afford to wait for the Land Registry figures? Or do you want a rougher estimate nearer the sharp end?
But they tried that with inflation didn’t they? (Consider that we have RPI / CPI and all derivatives ad infinitum.) I would guess we’d do the same here too. So instead of simplifying and codifying the system we would introduce a whole new raft of indices to argue over.
Good for commentators and house price watchers though, who can then bombard the public with even more analysis.