House price surveys.....who do you believe?
Every other day seems to bring a fresh house price survey, but they often appear to move in different directions.
The surveys take data from different times in the house buying process and also have different parameters.
So how do house price surveys work and which ones should you trust?
The Land Registry, which records all completed property sales in England and Wales, has been recording the price of all property sales since April 2000, although the data now goes back to January 1995.
The survey features the end of the buying process when a transaction is registered.
The Land Registry is using something called Repeat Sales Regression to measure the change in prices over time.
This means it only measures the change in the price of properties that have been sold before, to ensure a proper comparison.
Most sales are included, except for commercial properties and a small number of residential sales, such as those of council houses and council flats sold at a discount.
Repossessions and property transfers following a divorce are excluded to avoid skewing the sample.
The proceeds of all the transactions are totted up, and then divided by the total number of sales to reach an average sale price.
Because it takes virtually all residential property sales into account, the Land Registry's figures can provide a unique insight into not only national but local prices.
In fact, the Registry can provide an accurate picture of prices down to postcode level.
A similar survey is produced in Scotland by the Registers of Scotland.
Government price survey
The government has its own monthly house price index, issued by the Department for Communities and Local Government (DCLG).
It covers the whole of the UK and is based on data supplied by the Council of Mortgage Lenders.
This covers a large sample of completed sales which have gone through with a mortgage, which means that cash sales are not included.
The DCLG says that in the first half of 2010 there were an average of 42,000 loans per month to house buyers, and the sample amounted to about 24,000 sales each month, involving 32 lenders.
Thus the DCLG survey has been covering about 60% of UK sales involving a mortgage.
Unlike the Nationwide and Halifax surveys which are weighted according to transactions, the government's survey depends much more on the total amount of money spent.
Relying on expenditure in this way will mean that London and the South East, where house prices are highest, will have a greater influence on the government's index.
It takes figures from when a transaction is completed.
Nationwide and Halifax
Perhaps the best known snapshots of the property market are provided by two of the UK's biggest mortgage lenders - the Halifax, now part of Lloyds Banking Group, and the Nationwide.
Both surveys cover the entire UK, but are based on a sample of each lender's own loans each month.
The prices measured are those agreed at the point when the mortgage is approved, not at the later point when the sale is completed.
The Nationwide and Halifax surveys use identical statistical methods.
However, because they use different samples the figures sometimes diverge, in terms of both the monthly price changes and annual trends.
Like the DCLG survey, they are based only on property sales financed by mortgage lending, ignoring sales which are transacted on a cash basis.
Royal Institution of Chartered Surveyors (Rics)
Put simply, this survey reflects confidence in the property market rather than what is actually happening to house prices.
About 250 estate agents in the UK, who are members of Rics, are asked if they feel prices in their own areas have been rising or falling in the preceding three months.
Although this appears to be a subjective way of measuring property price changes, generally speaking, the Rics survey is the first to show any sea change in the market.
Respondents are also quizzed on a host of other related issues, such as whether the number of buyers and sellers are rising or falling.
Hometrack and Rightmove
Both of these property industry businesses also produce their own house price surveys.
Hometrack was first in on the act in 1999.
Data is collected from 3,500 estate agent offices from all 2,200 postcode districts in England and Wales. The estate agents report whether asking prices are rising or falling.
They are asked to report the "achievable selling price" for each of four standard property types in their area,
Rightmove's survey operates in a completely different way, by collating asking prices for houses placed on its own website over the previous month.
The firm says its website now displays 90% of all homes for sale in the UK although its monthly survey covers just England and Wales.
However, it obviously does not reflect the prices at which properties actually sell.