Property and mortgage experts have warned that house price indices (HPIs) are only a guide to where the market is heading, not a reflection of what your house is worth. The latest Halifax HPI is due out on Friday, now known as the Lloyds House Price Index after the parent bank decided to phase out the Halifax branding.
Each month, multiple indices are published, ranging from Nationwide and Halifax, based on mortgage approvals from their own customers and excluding cash buyers, to Rightmove, based on asking prices. The Land Registry HPI, UK-wide and based on completed sales including cash buyers, is widely seen as the definitive barometer, but it comes with a time lag that one broker says effectively makes it "an archaeological study."
Experts: Indices Are Not Personal Valuations
Mark Alexander, founder of Norwich-based Property118.com, said: "House price indices are useful for identifying broad market trends, but they are a poor guide to the value of any individual property." He added: "Two houses on the same street can differ in value by 20% or more depending on condition, layout, energy efficiency, lease terms, extensions or even which side of the road they're on. HPIs should inform expectations, not determine asking prices."
Thomas George, director of Mansell McTaggart, an estate agency covering Sussex, agreed: "House price indices tell you where the market is heading, they don't tell you what your home is worth." He noted: "The same property can appear to be worth £270,000 or £376,000 depending solely on which index you open. Rightmove prices hope, Nationwide prices mortgage approvals and the Land Registry prices reality, but even that lags by months."
Local Knowledge vs. National Averages
Manooch Suree, director of Uxbridge-based Zinga Financial Services, said he often spoke to clients "who've read a headline saying prices are up or down and assume their property has moved by the same amount." He added: "In reality, every home is different. Factors like location, condition and buyer demand can have a much bigger impact than a national average."
Evren Ergin, founder of property valuations platform ValuQ, agreed with George that "only the Land Registry prices reality: completed sales, every buyer." He continued: "So trust the Land Registry, but remember that it is a whole nation in one number and no one lives in one number. No average can price your one home."
Rohit Kohli, director of Romsey-based The Mortgage Stop, said he regularly had "clients coming in quoting a figure they've read in the papers and convinced they know what their property is worth." But he added: "More often than not, reality looks different. Land Registry-based indices give the strongest indication because they draw on completed sales, but even these can be months and months behind."
Indices as a Direction, Not a Price Tag
Matt Coulson, founder of Rickmansworth-based Heron Financial, stressed that "no national average is the value of your home." He continued: "Housing is intensely local, street by street and the only numbers that settle a deal are what a lender's surveyor puts on your property and what a real buyer will pay. Treat the indices as a thermometer for direction and momentum, not a price tag."
Darryl Dhoffer, founder of Bedford-based The Mortgage Geezer, said that when it came to HPIs, "every homeowner suddenly becomes a Wall Street hedge fund manager because the paper they read last night said house prices went up 1.2% in Leeds." He added: "The Land Registry is great, but by the time their data hits the news, it's basically an archaeological study."
Craig Fish, director of London-based Lodestone Mortgages, said: "No two properties are truly identical, even two houses next door to each other can differ on condition, layout, aspect or what has been done to them, and an index cannot capture any of that. The solution is not to ignore the indices but to go back to a good old fashioned valuation."
Stephen Perkins, managing director of Norwich-based Yellow Brick Mortgages, cut to the chase: "The figure that matters most is what comparable properties are actually achieving in your local market."
