House price surveys explained

The number of house price surveys is increasing
Every other day seems to bring a fresh house price survey, but each often appears to contradict the last.
BBC News asks how house price surveys work and which ones should you trust?

Land Registry

The latest survey to be launched, in October 2006, may become the most authoritative.

The Land Registry, which records all property sales in England & Wales, is now publishing a monthly report on house prices, in addition to its quarterly survey.

It has been recording the price of all property sales since April 2000.

Of the more than seven million sales since then, 1.4 million have involved the same house being sold again.

So the Land Registry is using something called Repeat Sales Regression to measure the change in prices over time.

In essence, this means it is comparing the price of properties sold now with the price paid when it was sold before.

The Land Registry's quarterly survey is still very comprehensive.

The proceeds of all the transactions are totted up, and then divided by the total number of sales to reach an average sale price.

However, repossessions and property transfers following a divorce are excluded to avoid skewing the sample.

But because it takes virtually all residential property sales into account, the Land Registry's figures can provide a unique insight into not only national but local prices.

In fact, the Registry can provide an accurate picture of prices down to postcode level.

However, since the survey comes out only once every three months, the figures are out of date by the time they are published.

A similar survey is produced in Scotland, known as the Register of Scotland.

Government price survey

The government has its own monthly house price index, issued by the Department for Communities and Local Government (DCLG).

It uses lending information from about fifty lenders, which is collected through the Survey of Mortgage Lenders.

Unlike the Land Registry survey the new government index does not contain information on cash purchases, which account for about a quarter of the market.

And another drawback is that it is not very timely. It will only appear two months in arrears.

But the survey offers indexes for the whole UK, the major regions and one for first-time buyers.

Unlike the Nationwide and Halifax surveys which are weighted according to transactions, the new survey depends much more on the total amount of money spent.

Relying on expenditure in this way will mean that London and the South East, where house prices are highest, will have a greater influence on the government's index.

Nationwide and Halifax

Perhaps the best known snapshots of the property market are provided by Britain's two biggest mortgage lenders, Nationwide and Halifax.

Both surveys cover the entire UK, rather than just England and Wales.

Surveys often contradict one another

Their figures are often very similar, as they are both based on the price agreed after a survey by their mortgage customers.

However, like the new government survey, they are based only on property sales financed by mortgage lending, ignoring sales which are transacted on a cash basis.

Royal Institution of Chartered Surveyors (RICS)

Put simply, this survey reflects confidence in the property market rather than what is actually happening to house prices.

Three hundred surveyors and estate agents in England & Wales are asked if they feel prices are falling or rising.

Respondents are also quizzed on a host of other related issues, such as whether the number of buyers and sellers are rising or falling.

Generally speaking, the RICS survey is the first to show any sea change in the market.

Hometrack and Rightmove

Both of these property websites also produce their own house price surveys.

Hometrack was first in on the act in 1999, and has established its survey as a very useful guide to current prices.

Data is collected from 3,500 estate agent offices from all 2,200 postcode districts in England and Wales. The estate agents report whether asking prices are rising or falling.

Rightmove's survey operates in a completely different way to the Hometrack survey, collating asking prices for houses placed on its own website over the previous month.

The sample size is quite extensive, as Rightmove claims to display around 35% of all homes for sale. Over half the UK's largest estate agency chains choose to list their properties on its site.

However, it obviously does not reflect the prices at which properties actually sell.