David Prosser: How best to measure house prices

Outlook There will be plenty of people who feel that Britain needs another house price index like it needs a fresh round of snowfall. Jill Matheson, the National Statistician,disagrees: yesterday she called for the launch of an official index measuring house price changes across the UK.

Ms Matheson has a point. There are already two Government-backed indices, but neither is terribly satisfactory. The Land Registry measure covers only England and Wales, while the Department of Communities and Local Government yardstick is a month behind other measures and takes its data not from the price at which properties change hands, but at the price agreed when a mortgage is granted.

Nor are any of the private sector indices perfect. The two best-known measures, produced by Halifax Bank and Nationwide Building Society, the country's two largest mortgage providers, often produce widely divergent results. Neither is wrong; it is simply that both rely on different datasets because they take readings from their respective mortgage customers. Halifax tends to be more weighted to Northern house prices for this reason, while Nationwide has a prejudice towards the South.

There are other measures too, of course, but while surveys from the Royal Institute of Chartered Surveyors, Hometrack and Rightmove, for example, are each useful in their own way, none gets any closer to providing an absolutely accurate snapshot of how the housing market is changing.

Given the national obsession with house prices, it's curious that we have not yet come up with a definitive measure to fuel the conversation. And since house price movements are a key factor in so many economic policy decisions – rightly or wrongly – it's more than a curiosity, it's a failing that needs rectifying. Let's hope Ms Matheson gets her way (as long as we get rid of the Land Registry and DCLG indices, that is).