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The Department Of Communities And Local Government's House Price Index

Please note: The responsibility for this house price index was handed over from the DCLG to the ONS in 2012.

Summary

The Department of Communities and Local Government House Price Index is frequently referred to in the media as "the government's official house price figures". It is these figures, along with the Land Registry's that the Government uses to identify house price changes, areas of high and low demand and housing affordability. This helps to determine economic regeneration as well as housing policies such as housing affordability.

Data

Formerly the Office of the Deputy Prime Minister The Department of Communities and Local Government (DCLG), publishes an 'experimental' monthly statistical release of latest house prices and house price inflation called the House Price Index. This is based on data on completed sales submitted from the Regulated Mortgage Survey (RMS) of the Council of Mortgage Lenders Bank Search. This involves around 50 mortgage lenders and includes around 45,000 completed sales each month.

Method

The report uses a mix-adjusted technique to determine an average house price nationally and regionally. The House Price Index, which is usually available on the second Monday of each month, also includes information about the type of buyer, for example first time buyers. Additionally it provides a seasonally adjusted update on the figures a month later, that takes into account traditional good and bad times of the year for property sales.

Disadvantages

  • Because it is based on mortgage completions, which may be months after an offer is accepted, the information can be several months out of date
  • The seasonally adjusted version is even more out of date, taking a further month to compile
  • Experimental methodology

Advantages

  • This appears a fairly robust set of figures based on mortgage completion information from the Regulated Mortgage Survey, which includes information about types of buyers, such as first time buyers
  • It also provides a seasonally adjusted version, which gives a better year on year comparison
  • Mortgage completion data tends to be more accurate than mortgage approval data (see Halifax and Nationwide indices)

Verdict

This is an experimental index that tends to give an optimistic picture of the market. Its information can also be out of date as it is based on completed mortgage deals, which can take months to process. Nevertheless it is still a useful addition to the wealth of information about house prices.

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