Price barometers swing from hot to cold

How can you take the temperature of the UK market when different measurements offer different readings? Sam Dunn reports

The cold weather that hit us at the end of last month symbolised the cooling-down of the overheated UK property market. For the eighth month in a row, according to the Hometrack index, house prices fell - this time by 0.2 per cent.

The cold weather that hit us at the end of last month symbolised the cooling-down of the overheated UK property market. For the eighth month in a row, according to the Hometrack index, house prices fell - this time by 0.2 per cent.

Or did they?

The outlook at Nationwide building society was warmer: its index recorded house prices up 0.5 per cent in the same month.

So who's right and which way is the market going?

For those seeking to sell their home and worried about getting their timing right, this question is vital: holding on for price rises that never appear could cost you thousands of pounds.

Unfortunately, you will look for a definitive answer in vain.

Homeowners can now take the temperature of UK housing from several sources, including the Halifax bank and the Land Registry, and each offers a different view of the market.

For example, the Rightmove property website's index looks at the beginning of the chain - analysing asking prices - while Land Registry figures are based on house prices at completion.

Get the broadest view by scrutinising every index, says David Hollingworth at mortgage broker London & Country. But the most useful approach, he adds, will be to check prices in your chosen area.

Here are some of the biggest indices tracking the market - and what to watch out for.

The Halifax

The UK's biggest mortgage lender has compiled a price index since 1983, looking at mortgage approvals each calendar month.

Its index is based on a "typical" house - a formula factoring in location, property type and number of rooms, among others - and "weights" data to iron out regional bias and the effects of, say, a large number of expensive properties being sold in one period.

Thanks to its big market share, the Halifax picks up clear pricing trends quickly and its figures are seasonally adjusted to reflect higher spring and summer sales.

Although its use of mortgage approvals for data means it has a snapshot of recent activity, its index will include details of deals that later fall through.

Nationwide

Taking the UK housing market's temperature since 1952, the building society's index calculation is similar to the Halifax's.

However, the two often diverge, and this is attributable to different samples being used for mortgage approval figures and, possibly, to the larger market share of the Halifax. Over the long term, both have plotted a broadly similar path.

The Land Registry

This government office holds records for all residential property transactions, and its figures are based on completion prices, including cash sales.

Such raw accuracy has given it authority in the industry, but neither seasonal adjustment nor weighting is applied.

Published since 1995, the index is released every three months: critics argue that this makes it a historical record rather than a trend-spotter.

Office of the Deputy PM

This takes completion prices from 50 lenders each month and so is renowned for accuracy on a more regular basis. But its data is not seasonally adjusted and the index has been going only since September 2003. Results are published weeks rather than days later.

Hometrack

This monthly property research website uses prices accepted by sellers - information taken from around 3,500 estate agents. This approach means the research is up to date but - due to subsequent valuations and surveys - the actual prices could have changed by completion.

Hometrack's figures are weighted for property type but not seasonally adjusted. It has been around for only four years.

Rightmove

This website advertises nearly half a million homes on behalf of 7,000 estate agents.

Its index is based on agents' asking prices across the UK, and the figures are weighted to take in postcode and property type.

Using asking prices - the earliest stage - gives Rightmove an edge in spotting price trends.

Its data is not seasonally adjusted and the index has been going for barely two and a half years.

Rics

Begun in 1978, a monthly report from the Royal Institution of Chartered Surveyors (Rics) draws on "sale agreed" price information from some 300 to 350 surveyors scattered across the UK. Rics' report also indicates confidence levels in the market.