It's probably not much of a surprise that property-obsessed Britain has at least five main indices measuring house prices.
Nationwide, Halifax, the Office for National Statistics (ONS), Zoopla and Rightmove all produce data reports – eagerly awaited by home buyers and sellers every month – that detail the ups and downs of home values across the country. But their conclusions on the state of the housing market are all slightly different, which can make things a little confusing.
So how do the property indices differ from each other? We take a look at what each one measures and which house price index is "the best".
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Nationwide House Price Index
The Nationwide House Price Index is one of the most popular indices used in the UK, with data stretching back to 1952.
The data used is the lender’s valuation at the mortgage approval stage – these may differ from the actual sale price, but the idea is that this is near enough to the end of the home-selling process to be a more realistic snapshot than the initial asking prices (such as are used in the Rightmove index – see below).
The index is “mix-adjusted”, which means it tracks a representative home by giving a relative weight to each property based on its characteristics, such as, for example, the number of bedrooms. The index uses a statistical process called hedonic regression to “relate observed combinations of these characteristics to the house purchase price”, the company says. This prevents price disparities caused by different types of properties being sold each month.
Latest figures: House prices fell by 0.4% in April, but rose 0.6% on an annual basis. The average house price was £261,962.
Halifax House Price Index
Halifax’s House Price Index has data going back to 1983 and, like the Nationwide index, is based on the bank’s valuation at the mortgage approval stage. The index hits its 40th anniversary this year, with house prices up 974% since early 1983, when it began recording data.
A standardised house price is calculated using this data and property price movements on a like-for-like basis are analysed over time.
Latest figures: House prices rose by just 0.3% month-on-month in July. Annual growth rate picked up to 2.1% from a slower 1.5% in June, the fastest pace of growth since December 2022. Average house prices were £266,334, up from £266,064 the month before.
Rightmove House Price Index
Rightmove’s house-price index differs from both the Nationwide and Halifax indices in that it is based on asking prices – i.e., the price that sellers list their properties at – of 90% of properties listed on its website. This is one of the very first stages of the home-buying process. The index also excludes inner London.
One obvious advantage of using asking prices to calculate average house prices is that it picks up price trends early on. But asking prices can differ drastically from the price at which houses are eventually sold.
“The main issue with the Rightmove index is its immediate volatility and mirroring of market sentiment rather than solid data. For example, if the housing market is bullish, the index will rise as sellers try to wrestle every penny out of their sales,” says London estate agent Petty Son & Prestwich.
There is also, of course, no guarantee that a house that's advertised will sell. There is every chance the seller may take the property off the market, sell it privately or sell it at a later date for a different price.
The house price report is useful for data on discounts and how quickly properties are going under offer, which gives a good indication as to the health of the property market.
Latest figures: Average new seller prices fell by 0.4%, or £1,617, to £373,493. The number of sales agreed was 15% higher than the same period a year ago.
ONS/Land Registry House Price Index
The UK House Price Index (HPI) is calculated by the Office for National Statistics and uses house sale data from HM Land Registry, Land and Property Services Northern Ireland, and Registers of Scotland.
The ONS index uses a statistical method called hedonic regression that adjusts the data so it takes account of the characteristics of a property such as the number of bedrooms rather than focusing solely on price. Unlike the Halifax and Nationwide indices, which are based on mortgage approvals by the landers, the ONS data also includes cash purchases which gives a broader view of the market.
The index does have a time lag though, of at least two months, due to how long it takes to process submissions from conveyancers to the Land Registry after a sale is completed.
Latest figures: House prices were up 0.6% in June month-on-month. On an annual basis, prices rose 2.4%, taking the average property value to £305,000.
Zoopla House Price Index
The Zoopla house price index uses sold prices, mortgage valuations, and data for agreed sales to calculate house prices for any given month. In other words, the Zoopla house price index tracks achieved prices, which is a key difference from an asking price index. Tracking homes that are 'sold subject to contract' is a better indicator of current house prices, as the asking price often does not reflect the sale price.
The index also provides data on the number of days it takes to sell a house, giving prospective sellers an idea of how long it will take for the property to sell. This measures the time from the initial listing to going under offer.
Unfortunately, Zoopla’s index, like all other indices on this list, relies on a limited pool of data with some degree of time lag.
Latest figures: The average property price was £265,600 in June, and is on track to be up to 2% higher by the end of the year.
UK Residential Market Survey by RICS
The UK Residential Market Survey by the Royal Institution of Chartered Surveyors (RICS) is very different to all other indicators on this list. It is a monthly sentiment survey of chartered surveyors operating in the residential sales and lettings markets.
It measures the percentage of surveyors reporting house price increases versus declines. While it doesn't provide an average house price for a specific month, it serves as an indicator of current and future conditions in the UK residential sales and lettings markets.
Surveyors are asked 18 questions on various metrics, such as sales, enquiries, listings, and house prices, and are required to report whether these have increased, remained the same or decreased.
A positive net balance indicates that more surveyors are observing price increases, signalling a strong housing market. Conversely, a negative net balance suggests that more surveyors are witnessing price decreases, indicating a more fragile housing market.
For instance, if 15% of surveyors reported an increase in buyer inquiries and 20% reported a decrease, the net balance would be -5%.
Latest figures: The July 2024 survey showed the net buyer enquiries balance was up +2% from -6% in the previous reading, the first reading in four months to be outside negative territory. The balance for sales agreed in July was -2%, up from -6% the month before.
-
Christmas at Chatsworth: review of The Cavendish Hotel at BaslowMoneyWeek Travel Matthew Partridge gets into the festive spirit at The Cavendish Hotel at Baslow and the Christmas market at Chatsworth
-
Tycoon Truong My Lan on death row over world’s biggest bank fraudProperty tycoon Truong My Lan has been found guilty of a corruption scandal that dwarfs Malaysia’s 1MDB fraud and Sam Bankman-Fried’s crypto scam
-
Halifax: House price slump continues as prices slide for the sixth consecutive monthUK house prices fell again in September as buyers returned, but the slowdown was not as fast as anticipated, latest Halifax data shows. Where are house prices falling the most?
-
Rents hit a record high - but is the opportunity for buy-to-let investors still strong?UK rent prices have hit a record high with the average hitting over £1,200 a month says Rightmove. Are there still opportunities in buy-to-let?
-
Where to find the best returns from student accommodationStudent accommodation can be a lucrative investment if you know where to look.
-
Revealed: the cheapest cities to own a home in BritainNew research reveals the cheapest cities to own a home, taking account of mortgage payments, utility bills and council tax
-
Buy-to-let returns fall 59% amid higher mortgage ratesBuy-to-let returns are slumping as the cost of borrowing spirals.
-
North outperforming the South for property investorsThe property market in the North of England is outperforming the South for both capital appreciation and rental yields.
-
UK house prices: half of sellers cut asking prices to secure a saleProperty price reductions have reached their highest level in at least nine years.
-
Halifax: House prices fall for the fourth month in a rowHigher interest rates have wiped nearly £1,000 off the average UK house price between June and July.
