We use necessary cookies to make our site work (for example, to manage your session). We’d also like to use some non-essential cookies (including third-party cookies) to help us improve the site. By clicking ‘Accept recommended settings’ on this banner, you accept our use of optional cookies.
Necessary cookies
Analytics cookies
Yes
Yes
Yes
No
Necessary cookies
Necessary cookies enable core functionality on our website such as security, network management, and accessibility. You may disable these by changing your browser settings, but this may affect how the website functions.
Analytics cookies
We use analytics cookies so we can keep track of the number of visitors to various parts of the site and understand how our website is used. For more information on how these cookies work please see our Cookie policy.
The purpose of Bank Overground is to share our internal analysis. Each bite-sized post summarises a piece of analysis that supported a policy or operational decision.
The ONS/Land Registry House Price Index is now our preferred measure of house price inflation. In part, that is because it has a much larger sample size and tends to be less volatile.
Following its designation as a National Statistic, the ONS/Land Registry UK House Price Index (UK HPI) is our preferred measure of house price inflation.
We prefer UK HPI to other measures because it has a much larger sample size, and tends to be less volatile (Chart A). It is also granular enough to provide reliable disaggregation by region and purchase-type.
Chart A
The UK House Price Index is the most stable measure of house prices
But since the UK HPI is based on transactions data it lags other measures of house prices and is also subject to revision (though those revisions have become smaller and less biased recently, (Chart B)).
Chart B
Revisions to the UK House Price Index have become smaller and less biased
To overcome the longer lag with which UK HPI data are produced, we have developed a nowcasting and nearcasting toolkit for house price inflation to provide us with an estimate of the UK HPI for the current quarter and the quarter ahead.
This employs similar techniques to those used in our GDP nowcast, and draws on data from other measures of house prices including those from Rightmove, Halifax, Nationwide and the RICS Residential Market Survey.
This post has been prepared with the help of Hasdeep Sethi.
This analysis was presented to the MPC as part of its November 2018 round.