The Land Registry has launched a House Price Index which only looks at the multiple sales of the same house, rather than looking at single sales within a time period.
The new index utilises the repeat sales regression method, which also forms a part of Calnea’s automated valuation model. Under RSR, house price growth is measured by observing houses which have been bought or sold more than once.
Whilst this is the first index of its kind for England & Wales and only became possible recently following Land Registry advancements, RSR is a well established methodology. In the United States, RSR is the dominant house price indexation technique, and is used to construct their official national house price index.
The Land Registry Index uses a sample size that is larger than that used by any other House Price Index. This means that the Index shows less sample-related volatility from month to month, and is a more reliable indicator for this vital asset class.
Susan Smith, professor of Geography and director of the Institute of Advanced Study at Durham University, says: “A repeat sales index which taps into price changes for all residential property sales is long overdue for the UK. This is the only index we have which takes virtually all known housing transactions into account.
“It is moreover based on an enduring, consistent and reliable source: the Land Registry. The critical point, however, is that, because it has the potential to track changes in home values so accurately, it is likely to compete with existing house price indices as the benchmark for a range of financial innovations”.
Selwyn Lim, of Calnea Analytics, says: “We are delighted to work with Land Registry on this ground-breaking index. RSR is relevant in an AVM context as well, since it enables Calnea Analytics’ technology to treat all properties as unique, and avoids the problem experienced by characteristic based AVMs which value properties on the basis of limited factors.”
Ted Beardsall, Land Registry deputy chief executive, says: “The Land Register provides the most complete set of house price data for England and Wales. We believe that our new House Price Index is more timely and will become the authoritative and most accurate reflection of average house price movements in the country.”