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A Guide to House Price Figures: Hometrack UK Cities House Price Index

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Summary

In 2014 housing and mortgage research firm Hometrack replaced its House Price Survey of UK estate agents with a UK Cities Index focusing on property price movements in 20 UK cities. These localised, urban indices were initially created in 2002 by Hometrack for use in its wider property market research but had remained unpublished until October 2014.

Data

The Hometrack UK Cities House Price Index is updated monthly and also gives quarterly and annual changes for the 20 UK cities it covers. Each month it details the cities with the highest and lowest house price growth as well as offering city averages for the UK and a regional breakdown. For its figures for London it includes the immediate commuter areas outside of the capital's 33 Boroughs. In total 44 council areas are included in Hometrack's broader definition of London.

Method

Hometrack's Cities House Price Index is based on repeat sales methodology and uses Land Registry House Price Index data to look at the changing value of specific properties over a period of time. This is based on the price paid for a property rather than asking price. There are no seasonal adjustment or revisions based on inflation, however there is weighting according to the volume of private housing stock in each area.

Monthly data is revised each month as more house price sale data becomes available. The base date for applying revisions to the average price has been set at December 2013.

Disadvantages

  • The repeat sales method does not take into account the inflation rates of different types of housing. It also does not take into account changes to a property such as structural work or its condition, which can also influence value.
  • By focusing on cities it only tells half the story about house price changes in the UK, ignoring trends in rural areas and towns. In total less than 5% of land in the UK is covered in the Hometrack Cities House Price Index.
  • By being based on actual sales the figures can be out of date as it can take months for sales to be completed and for the data to be processed by the Land Registry.

Advantages

  • While Hometrack concedes the land area of its Cities House Price Index is small it argues that it covers more than 40% of the value of UK housing.

Verdict

The Hometrack Cities House Price Index is an interesting addition to the array of house price indices through its unique focus on urban property market trends. However, by ignoring rural and smaller urban areas it offers just a snap shot of the UK property market. In addition, by basing itself on Land Registry prices its figures will be out of date in comparison to indices based on asking prices.

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