By Gregory Thwaites and Rob Wood of the Bank's Structural Economic Analysis Division.
House prices are an important consideration in assessing macroeconomic developments in the United Kingdom. But the special characteristics of housing-heterogeneity, infrequent sale and negotiated prices-give rise to important issues that complicate their measurement. There are several valid concepts of house prices-such as the average transaction price, the price of a typical house and the housing stock deflator-each of which is useful for a different purpose. Users must therefore be careful to match the measure they use with the concept of house prices they are interested in. Furthermore, all the available measures are volatile, so high-frequency changes in house price inflation should not be expected to persist.