Which house price index is the best?

There are at least five indices measuring house prices. But which house price index is the best?

Houses and coins stacked for a story on which house price index is the best
(Image credit: Getty Images)

Britain is property-obsessed, so much so that we have at least five main indices measuring house prices. Nationwide, Halifax, the Office for National Statistics, Zoopla and Rightmove all produce data reports every month, detailing the ups and downs of home values across the country. 

At the start of the year indices reflected the property market was experiencing a boost as mortgage rates fell on rate cut expectations from the Bank of England. However things appear to have stalled, given the BOE has yet to make a cut to its base rate. 

But the different indices’ conclusions on the state of the housing market are all slightly different, which can make things a little confusing. So how do they differ and what does each one measure?

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If you’ve been keeping an eye on house prices, then we look at which house price index is the best.

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 given 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 40-year 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 0.1% in April, and by 1.1% on an annual basis. The average house price was £288,949. 

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 for sale 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 the approach of using ask prices to calculate house prices is that buyers can spot price trends early on. But asking prices can drastically differ from the prices 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 listed house will sell. There is every chance the seller may withdraw the property and sell it at a later date.

It is also worth checking the house price report for data on discounts and how soon properties are going under offer to give you an idea of the health of the property market.

Latest figures: Asking prices rose by 0.8% in May to £375,131, a new record. Asking prices are 0.6% higher than 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 so 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 once a sale completes.

Latest figures: In March, house prices were up 0.7% month-on-month, and 1.8% on a yearly basis. The average price of a UK property was £283,000. 

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 might 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: Property prices were up 0.1% from March, and down 0.2% compared to a year ago. The average house price in April was £264,500. 

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 April 2024 survey showed new buyer enquiries fell to -1% in April, down from a previous reading of +6%. Agreed sales were up however, at +5% from -5% the month before. 

Nicole García Mérida

Nic studied for a BA in journalism at Cardiff University, and has an MA in magazine journalism from City University. She joined MoneyWeek in 2019.