Debate House Prices
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The house price indices - Current and falls from peak.
HAMISH_MCTAVISH
Posts: 28,592 Forumite
There's been a few posts now pointing out the difference between asking prices on Rightmove, and actual prices on Nationwide/LR etc. In some articles it's even been described as a "reality gap" which I think is a bit misleading.
I suspect it's more a case of different methodology and different starting points of peak price rather than a large gap between asking and sold.
So below I've taken most of the major indices and grouped them by price at peak as a starting point.
So the three indices that start out with a peak price in the 200K+ range are Rightmove, DCLG, and Acadametrics. All show broadly similar falls of between 4% and 8% from peak.
Index:____Peak:____Current:_____Last Month______% from peak
DCLG: ---- £221,758 - £204,981
Jun 11
-7.57%
Acadmtrcs- £231,595 - £217,300 ---- Jul 11
-6.17%
Rightmove- £242,500 - £231,543 ----Aug 11
-4.52%
Land Registry and Nationwide show an almost identical peak price, and most recent prices within a few grand of each other, albeit for different months.
Index:____Peak:____Current:_____Last Month______% from peak
Land Reg - £186,045 - £161,479 ---- Jun 11
-13.5%
Nationwide £186,044 - £168,731
Jul 11
-9.5%
The odd one out is Halifax, with a current price similar to LR and Nationwide, but a peak price far higher, leading to bigger falls in percentage terms from peak.
Index:____Peak:____Current:_____Last Month______% from peak
Halifax --- £199,770 - £163,981
Jul 11
-17.92%
Not sure why this is the case, but Halifax have recently admitted they're reviewing their methodology as they're not sure it's accurate.
It's also interesting to note that national sold price indices vary from slightly over 6% down from peak, to nearly 18% down from peak. I rather suspect the reality for most people is somewhere in the middle.
Most of these indices mix adjust, so I don't think the London effect has any great impact. London-only indices are significantly higher with mostly much smaller falls from peak ranging from -1.6% on Nationwide, to -5.7% on Land Registry. With the single exception once again of Halifax, which shows - 19% for London.
I suspect it's more a case of different methodology and different starting points of peak price rather than a large gap between asking and sold.
So below I've taken most of the major indices and grouped them by price at peak as a starting point.
So the three indices that start out with a peak price in the 200K+ range are Rightmove, DCLG, and Acadametrics. All show broadly similar falls of between 4% and 8% from peak.
Index:____Peak:____Current:_____Last Month______% from peak
DCLG: ---- £221,758 - £204,981
Jun 11
-7.57%
Acadmtrcs- £231,595 - £217,300 ---- Jul 11
-6.17%
Rightmove- £242,500 - £231,543 ----Aug 11
-4.52%
Land Registry and Nationwide show an almost identical peak price, and most recent prices within a few grand of each other, albeit for different months.
Index:____Peak:____Current:_____Last Month______% from peak
Land Reg - £186,045 - £161,479 ---- Jun 11
-13.5%
Nationwide £186,044 - £168,731
Jul 11
-9.5%
The odd one out is Halifax, with a current price similar to LR and Nationwide, but a peak price far higher, leading to bigger falls in percentage terms from peak.
Index:____Peak:____Current:_____Last Month______% from peak
Halifax --- £199,770 - £163,981
Jul 11
-17.92%
Not sure why this is the case, but Halifax have recently admitted they're reviewing their methodology as they're not sure it's accurate.
It's also interesting to note that national sold price indices vary from slightly over 6% down from peak, to nearly 18% down from peak. I rather suspect the reality for most people is somewhere in the middle.
Most of these indices mix adjust, so I don't think the London effect has any great impact. London-only indices are significantly higher with mostly much smaller falls from peak ranging from -1.6% on Nationwide, to -5.7% on Land Registry. With the single exception once again of Halifax, which shows - 19% for London.
“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”
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Comments
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Actually they don't.
DYOR.
Nationwide:Nationwide house prices are mix adjusted
HBOS:In summary, prices are disaggregated into their constituent parts using a commonly used statistical technique called multivariate regression analysis. This allows values to be attributed to the various qualitative characteristics (type of property, region, etc.) and quantitative characteristics (age of property, number of habitable rooms, garages, bathrooms, etc.) of a property.
This is a rather complicated way of saying 'mix adjusted'.
Land Registry don't need to use mix adjustment as they compare like-with-like directly as they track the resale of properties (technically called repeat sales regression). DCLG use mix adjustment. LSL Acadametrics us a mix of repeat sales regression and mix adjustment for newer places.
Rightmove are coy about how they put their index together so I don't know if they mix adjust.0 -
So you are complaining a missleading reality gap. Fair enough, so what sort of 'reality gap' do the bulls want? I think this is what you are after:=HAMISH_MCTAVISH;discussion/3436457]In some articles it's even been described as a "reality gap" which I think is a bit misleading.
https://forums.moneysavingexpert.com/discussion/3432763UK House Prices Will Hit "All Time High" by 20150 -
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JonnyBravo wrote: »
DYOR.
Got any others for gen to look at?
1 index is not "most" is it.
Nice one. :rotfl:
DYOR.
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Actually they don't.
Actually, they do.
DCLG and Acadametrics use standardised mix adjustment, Nationwide and Halifax use hedonic regression to establish the price of a "typical house", but it achieves the same goal of effectively mix adjusting by removing bias from different property types selling.
Land Registry uses repeat sales regression, which measures only repeat sales of the same property.
Nationwide:
The monthly figure measures the mix adjusted average house price for all houses in the UK. The set of properties sold from month to month will vary by location and design etc. and some adjustment is necessary to make sure all of these do not give a false impression of the actual changes to house prices. A mix-adjusted or 'standardised' index is not affected by such changes because the relative weight given to each characteristic of a property in the 'mix' (or 'basket', to use an analogy with retail prices) is fixed from one period to the next.
Halifax
As a result, the technique allows us to track the value of a 'typical' house over time on a like-for-like basis (i.e. with the same characteristics).! This prevents the possibility of short-term changes in the set of properties sold from month to month (for example, shifts in the regional complexion of the market or a change towards more large properties being sold) giving a misleading impression of the change in the price of a 'typical' house.
Land Registry:
The HPI is produced using the Repeat Sales Regression (RSR)
method. Under the RSR method, house price growth is measured
by observing houses which have been sold more than once. By
using repeat transactions, differences in the quality of homes
comprised in any monthly sample are greatly reduced – thereby
ensuring an ‘apples to apples’ comparison. The HPI uses Land
Registry's own price paid dataset. This is a record of all
residential property transactions made in England and Wales
since January 1995. At present it contains details on
approximately 16 million sales. Of these, approximately six
million are identifiable matched pairs, providing the basis for the
repeat-sales regression analysis used to compile the index.
Acadametrics
LSL Acad HPI “ultimate” is simply the result
of taking the average of the price at which every residential transaction in England & Wales took place, smoothed over rolling 3 month periods, mix adjusted to eliminate the effect of monthly changes in the types of properties sold and seasonally adjusted to account for e.g. summer price
rises.
DCLG
The house price index is mix-adjusted to allow for the fact that different houses are sold in different periods. House prices are modeled using a combination of factors that produce a model containing a large number of "cells" (variable combinations such as first time buyer, old dwelling, and detached house in London). Once the monthly price estimates for all cells have been determined by the model, they are combined with their appropriate weights to produce that month's mix-adjusted average prices for all the required output categories. Weights are calculated once a year based on the relative numbers of transactions during the previous three years, given by the Land Registry data. The index is an annual chain-linked Laspeyres-type index, like the Retail Prices Index as published by the Office for National Statistics.DYOR.
Precisely.
“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »Actually, most of them do.
Actually they don't.
Mix Ajustment and Hedonic Regression are different methodologies.
Though I see you have realised this.HAMISH_MCTAVISH wrote: »but it achieves the same goal of effectively mix adjusting
Still, could be worse. You could have done a Johnny Bravo Style comedy backfire.0 -
1 index is not "most" is it.
Nice one. :rotfl:
DYOR.
5 out of 6 is though.......
And we think Rightmove do as well, but hard to find details.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
Mix Ajustment and Hedonic Regression are different methodologies.
.
That achieve the same thing, ie, adjusting average prices to compensate for the mix of properties selling and avoid skew.
Nationwide even refer to their Hedonic Regression as "mix adjustment".“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »5 out of 6 is though.......
Uh huh. And "most" of those "effectively" use mix adjustement don't they. :rotfl:
Which isn't the same as using mix adjustement.HAMISH_MCTAVISH wrote: »That achieve the same thing
Yes. You said. "effectively mix adjusting". 0
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