The average UK house is now worth £156,273, according the experimental House Price Index launched to...
The average UK house is now worth £156,273, according the experimental House Price Index launched today by the Office of the Deputy Prime Minister.
After months of planning, the first government HPI is still listed as experimental but is an attempt to try and smooth out the differences between housing indices of major banks, building societies, estate agents and professional bodies.
First public findings from the ODPM John Prescott determine that the average house has increased in value by over £18,000 in the last year as the average price last year was £138,042.
This leaves the annual house price inflation at 14.6%, higher than the 13.4% seen in June this year, but London is definitely experiencing a slowdown as the average inflation in the capital was 9.4% in July 2003, compared with 5.6% in June.
The mix-adjusted house price series is created by pulling together an enlarged sample of completions data, says the ODPM, which amount to around 25,000 completions per month, from at least 50 mortgage lenders who supply data through the Survey of Mortgage Lenders (SML).
This means data is slightly different to that presented by Halifax and Nationwide, for example, as the two mortgage base their indices on "approval prices", rather than completion prices, and could therefore change before completion.
While the HPI is still in live testing, the ODPM stresses that much of the data recorded in the first year cannot be used, as any month on month figures cannot be compared until "a sufficiently long series exists".
An audit to assess the quality of data will be taken this autumn so the government can hopefully confirm that the HPI will become a national statistic from next year.
Content of the index will have to be based on completion prices, says the ODPM, as a Land Registry-based index of completions will be the only index recognized by the government in five years time.
It will also be based on "expenditure" rather than "transaction weights" used by Halifax and Nationwide. When it comes to the national stats, the reduced transaction weights by banks reduce the impact of activity in London and the South-east.
Exceptionally high or low sales prices will be included in any price index, says the ODPM, as removing them does not give a fair representation of market prices.
However, any cash purchases - which can make up 25% of all property sales - cannot be included in the index because the Land Registry does not record such deals.
Details of the next index update will be published on October 13th, with the quarterly review to be published in November.
For more information on the ODPM methodology, click thru the "Housing Stats" right-hand link.
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