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Are you thinking about moving home? Perhaps you want to downsize now the kids have fled the nest. Or maybe you’re even considering upsizing in retirement, finally to own your dream home.
Either way, regularly monitoring house prices can help you to stay on top of the latest housing market trends, both nationally and regionally.
When it comes to the UK property market, there are various sources of information and indicators available, both to would-be homebuyers as well as those just interested in the latest trends. Here’s our guide to several of the UK’s best known property pointers.
What’s on this page?
One way to keep abreast of property prices and the housing market in general is to use a house price index or indicator (HPI).
These tools measure the rate at which residential property prices change over time, helping you to determine whether it’s a good time to buy and sell.
A house price indicator is a general term for any measure that tracks changes in property prices over time, showing whether prices are rising or falling in a housing market, and by how much.
But not all HPIs are the same, with indicators often making use of different data sets to produce their findings. Some, such as the widely-quoted ones from Nationwide and the Halifax, are based on mortgage approvals. Other indicators are based on asking prices or completed sales.
Some indices also adjust for seasonal patterns. For example, housing activity typically rises in the spring and then slows towards the end of the year as winter takes hold. Adjusting for this is important as it helps to remove predictable seasonal fluctuations and gives a clearer picture of actual underlying price trends.
House price indicators are useful because they provide a simple snapshot of the housing market without the need to look at individual property sales. They can show you whether prices are generally going up, falling, or remaining steady.
David Hollingworth, associate director of L&C Mortgages, suggests it’s important to understand what each index is measuring and how that relates to different stages in the property purchase process.
He says: “That’s why the figures can look different depending on which index you look at, which can initially appear confusing. Taken as a whole, though, the indices help to give a picture of what’s happening in the market and are therefore useful indicators.”
Understanding these trends could help you decide whether it’s a good time to put your home on the market and move to a new property.
For example, when prices are rising, downsizers may benefit because the value of their current home could increase, potentially leaving them with more money left over after moving to a smaller home.
On the other hand, if you’re upsizing, falling house prices can sometimes work in your favour as the cost difference between your current and new home may narrow, making it more affordable to move to a bigger home.
Housing market trends can reflect both national moves as well, as what’s happening on a more regional basis. In practical terms, it’s important to keep an eye on what’s happening in your local area which could be bucking national trends.
Hollingworth says: “Often the headline stats in an index will be national which could paint a different picture to what’s happening in your local market.”
We’ve put together an overview of the main UK HPIs and how they work.
The UK House Price Index (UKHPI) is the official government measure of house price inflation. It uses property sales data from HM Registry, as well as Registers of Scotland and Land, and Property Services Northern Ireland.
Hollingworth says: “That gives an accurate figure based on ‘done deals’, but as property purchases can take time to complete and be registered it does mean that it reflects prices that could have been agreed some time ago.”
Unlike some other HPIs, the UKHPI also includes cash purchases.
An ONS spokesperson says: “The UKHPI is based on actual transaction prices as recorded at the completion of a sale and therefore provides full coverage of the housing market making it both a comprehensive and reliable measure of overall trends in the housing market.”
The UK Residential Market Survey by the Royal Institute of Chartered Surveyors (RICS) officially began monitoring house market conditions in 1978. Rather than providing an average house price, it’s a monthly sentiment survey is used by the government, the Bank of England, and the wider property industry, as an indicator of current and future market conditions.
Tarrant Parsons, head of market research and analysis at RICS, says: “Each month [the survey] captures the views of chartered surveyors operating across every region of the country, covering new buyer enquiries, fresh sales instructions, agreed sales, house prices, along with tenant demand and rental price expectations across the lettings market.”
Hollingworth adds: “The RICS Residential Market Survey a good way to get an idea of the mood in the market and whether buyer and seller activity is picking up or slowing down.”
Property portal Zoopla also has its own House Price Index.
Hollingworth says: “The Zoopla House Price Index looks to give a measure of achieved sales price of homes by feeding in a variety of data sources including sold prices, mortgage valuations, and data for recently agreed sales.”
It also provides data on the number of days it takes to sell a home, giving you an indication of how long it could take to sell your property.
Richard Donnell, executive director at Zoopla, says the company's indicator is built "on the largest underlying data sample of any UK house price index and weighted to the stock of homes". He adds: "It’s less volatile than other measures over short periods. Housing market conditions vary widely across the country, and the index captures local market trends as well as the national picture.”
Rightmove compiles its House Price Index from the asking prices of properties coming onto the market, rather than those recorded during the application process or final sales.
Hollingworth says: “This therefore gives a picture of what’s happening right at the very front end, giving a measure of how sellers are pricing their properties as they respond to changing market conditions.”
However, it also means the final sale price could be a lot lower and the index typically has a higher average price, as a result.
A spokesperson at Rightmove says: “Having a large sample size and providing real-time data, the Rightmove Index has established itself as a reliable indicator of current and future trends in the housing market.
The Nationwide House Price Index is based on the lender’s own valuations from mortgage approvals. This means it can process the data immediately to provide a monthly report tracking trends in UK house prices, with changes seasonally adjusted. It is one of the longest-running house price indices, with data stretching back to 1952.
Andrew Harvey, Nationwide’s senior economist, says: “The Nationwide House Price Index provides a timely, long-running, and reliable indicator of UK house price trends. As the index uses data at ‘mortgage offer’ stage as opposed to completed sales, it should give an earlier indication of price movements.”
Like the Nationwide index, the Halifax House Price Index is a monthly report that tracks changes in UK property prices using data from Halifax’s own mortgage approvals. It provides an estimate of average house prices and how they are changing across the country and is seasonally adjusted.
According to a Halifax spokesperson: “The index has been designed so that it is dynamic and accounts quickly for any changes in the market. It also includes house price data for the individual nation and regions, along with groups such as first-time buyers.”
Hollingworth adds: “Halifax and Nationwide are responsible for two of the most quoted house price indices and both rely on their own mortgage approval data. That means that they give an indicator of prices early in the process and so give an up-to-date picture of what’s happening in the market.”
Whether you’re just a keen market watcher, or have a more pressing and practical need to understand how house prices are performing at any given time in your area, there’s little doubt you’re spoilt for choice when it comes to sources of information.
HPIs are responsible for plenty of news headlines when they’re published each month and can help paint a picture of the state of the property market both nationally and regionally.
But, inevitably, there will be certain limitations to what different pointers can provide. For example, some neither refer to property type nor size, with a potential to skew average prices up or down.
In addition, certain HPIs do not distinguish between homebuyer types: first-time, existing homeowners, etc, while those that rely on mortgage data won’t account for cash sales.
Despite these limitations, when assembled in the round HPIs can make up a useful part of a property purchaser’s toolkit. They can provide statistical support to homebuyers looking to make bricks and mortar-based buying and selling decisions.
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