18th December 2013 
 
Issued by 
Office for National Statistics, 
Government Buildings, Cardiff 
Road, Newport, NP10 8XG 
 
Media Office 
             0845 6041858 

## Quality And Methodology Information

 
General details 
 
Title of output:  
House Price Index 
Abbreviated title:  
HPI 
Designation:  
Official Statistics not designated as National Statistics  
Geographic coverage: 
UK, Country and Region 
Contact details:  
hpi@ons.gsi.gov.uk. 

## Executive Summary

The Office for National Statistics (ONS) House Price Index (HPI)1, previously published by the Department for Communities and Local Government (DCLG)2, is a monthly release that publishes figures for mix-adjusted average house prices and house price indices for the UK, its component countries and regions. The index is calculated using mortgage financed transactions that are collected via the Regulated Mortgage Survey by the Council of Mortgage Lenders (CML)3. These cover the majority of mortgage lenders in the UK. The HPI complements other measures of inflation published by ONS such as the Consumer Price Index, the Producer Price Index and the Services Producer Price Indices. 

The ONS HPI statistical bulletin1 provides comprehensive information on the change in house prices on a monthly and annual basis. It also includes analysis by country, region, type of buyer (first-time buyers and former owner-occupiers) and type of dwelling (new dwelling or pre-owned dwelling). The ONS HPI was developed to produce a consistent series of traded house prices. Until its transfer to ONS in April 2012, the index was produced and published by the DCLG. One of its main features is the mix-adjustment of the monthly transactions to remove the effect of changing composition of sold stock. Since its introduction, the index relies on the use of mortgage transaction data, which provide good coverage of the housing market but excludes those properties that are cash sales. 

 
In December 2010, the National Statistician's Review of House Price Statistics4 made a series of recommendations. These were mainly driven by the availability of numerous official house price statistics, which vary in their sample, methods and focus. The main recommendation was for the development of a definitive official statistic. 

 
The importance of this index is reflected in the development of a European regulation5, introduced in February 2013, which is the first stage in the introduction of owner occupiers' housing costs into the Harmonised Index of Consumer Prices. The regulation identifies house price indices as 'important indicators in their own right' reflecting the consequences for an economy of unstable or unsustainable house price development. This document contains the following sections:  
- 
Output quality; 

- 
About the output; 
- 
How the output is created; 
- 
Validation and quality assurance; 
- 
Coherence and comparability; 
- 
Concepts and definitions; 
- 
Other information, relating to quality trade-offs and user needs; and 
- 
Sources for further information or advice. 
 

Output quality 
 
This document provides a range of information that describes the quality of the data and details any points that should be noted when using the output. 

 
ONS has developed Guidelines for Measuring Statistical Quality6; these are based upon the five European Statistical System (ESS) Quality Dimensions. This document addresses these quality dimensions and other important quality characteristics, which are: - 
Relevance; 

- 
Timeliness and punctuality; 
- 
Coherence and comparability; 
- 
Accuracy; 
- 
Output quality trade-offs; 
- 
Assessment of user needs and perceptions; and 
- 
Accessibility and clarity. 
 More information is provided about these quality dimensions in the sections below. 

 
About the output Relevance 
(The degree to which statistical outputs meet users' needs.) The ONS HPI provides a monthly estimate of the price of current property relative to its price in February 2002. The mix‐adjusted HPI series started in 1969, when the index was calculated from a 5% sample of the mortgage transactions of a number of building societies. From 1993, the coverage of transactions increased from building societies to cover all mortgage lenders. In 2002, the index started using hedonic regression to perform the mix‐adjustment. In 2003, the sample submitted by each mortgage lender was expanded from 5% to cover all their recorded mortgage transactions. These mortgages transactions are collected from the Regulated Mortgage Survey of the CML. The production of house price statistics is relevant for a large number of purposes. Users of official housing market statistics range from central government, local government and devolved administrations through to financial institutions, housing associations, investors, businesses (including estate agents and house builders), academics and households. They use housing market statistics to make a wide variety of decisions including provision of housing, whether to buy, and whether to lend. Details of the main users and their uses of housing market statistics are given below. 

 
Summary of the main users of House Price Statistics 
 
Users  
Uses 

Central Government 
Central government has three key uses for housing market statistics:  
- monitoring economic performance;  
- policy making and monitoring; and  
- regulation.  
Local Government 
Local authorities require housing market statistics :  
- to monitor and develop their housing policies to meet the current and 
future needs of their areas; and - to understand how changes and policies at the national level affect housing at the local authority level.  
Devolved 
administrations 
Devolved administrations require housing market statistics for: - supporting policy making and monitoring changes at the country 
specific level similar to those requirements of central government; and 
- secondly, they use it for comparison to wider UK policies and economy.  
Banks and building 
societies 
Housing market statistics are used for mortgage lending in order to make decisions on whether to lend, how much to lend, and setting 
interest rates.  
House builders 
House builders are interested in whether and where demand for new 
housing exists; and the returns received on homes built or converted.  


Estate agents & letting 
agencies 
- Estate agents are interested in the numbers of properties being sold 
and the price for which they are sold; as well as the types of properties and their location. They need to be able to advise potential sellers on the achievable selling price of their property but also require statistics 
in running their business.  
- Letting agencies are interested in similar characteristics to estate agents but require the numbers of properties being rented and the rent values which they achieve. Although some national estate agents exist, 
most are based at the local or regional level.  
Housing associations 
Housing associations are primarily interested in numbers of people in housing need together with statistics on the housing market which helps them to decide whether to purchase or build property to meet that need. Values of private and social housing rents will also influence their decisions, as this will affect the social housing they can provide.  

 
Further information on the uses of HPI can be found in the National Statistician's Review of Official Housing Market Statistics4. 

 
Timeliness and punctuality 
(Timeliness refers to the lapse of time between publication and the period to which the data refer. 

Punctuality refers to the gap between planned and actual publication dates.) 
 
The ONS HPI follows a monthly publication schedule and is lagged by two months. This lag is mainly due to the time it takes to collect the mortgage data from banks and building societies across the UK. The time of publication of the HPI depends on the data delivery from the Council of Mortgage Lenders, hence the HPI statistical bulletin is published either on the second or third Tuesday of the second month after the reference period. 

For more details on related releases, the UK National Statistics Publication Hub7 is available online and provides 12 months' advance notice of release dates. In the unlikely event of a change to the pre-announced release schedule, public attention will be drawn to the change and the reasons for the change will be explained fully at the same time, as set out in the Code of Practice for Official Statistics8. How the output is created 
 
Data sources Since October 2005, the ONS HPI (formerly the DCLG HPI) has been based on a sample of mortgage completions data from the Regulated Mortgage Survey as collected by the CML. 

 
The number of transactions received from the RMS is affected by the total number of mortgages completed for house purchase in any period. During 2011, the sample covered 65-70% of all UK 
mortgage completions. 

 
Price methodology 
  
Full details of the methodology used to calculate the ONS HPI can be found in the Official house price statistics explained9 article. The ONS HPI is mix-adjusted to allow for differences between houses sold (for example type, number of rooms and location) in different months within a year. 

House prices are modelled using a combination of characteristics to produce a model containing around 100,000 cells (one such cell could be first-time buyer, old dwelling, one bedroom flat purchased in London). Each month, estimated prices for all cells are produced by the model and then combined with their appropriate weight to produce mix-adjusted average prices. The index values are based on growth rates in the mix-adjusted average house prices and are annually chainlinked. More information on the model used is available via the hedonic model methodology paper10 
published on the HPI User Guidance webpage11.  
 
Re-weighting  
 
The ONS HPI is a weighted Laspeyres-type index. In January of each year, the index weights are updated based on the relative numbers of transactions during the previous three years, which are weighted to total transactions obtained from Land Registry. Applying new weights ensures  
 
that the index keeps up to date with changes in the types of properties that are being purchased, and therefore reflects the price of the average property. One consequence of changing the weights every year is that the mix-adjusted house prices cannot be compared between years as the weights are different. The index itself is constructed on a chainlinked basis, which enables year-on-year comparisons to be made. This means that the year-onyear change in the index for June 2011, say, is effectively the change in the average price from June to January 2011 (using the weights for 2010) combined with the change in the average price from January to June 2011 (using the weights for 2011). Therefore, the year-on-year change in the index is not the same as the year-on-year change in the mix-adjusted average price. More information on the HPI methodology12 is available on the DCLG Website. 

 
Seasonal adjustment The housing market shows seasonal effects that affect house prices. For example, prices have tended to be higher during the summer months than during the winter months. These seasonal effects are estimated and adjusted for in order to calculate month-on-month price changes. 

Seasonally adjusted figures are provided at a national level in Table 7 alongside the unadjusted figures of the other tables. Seasonal adjustment13 is performed each month and reviewed each year, using the GSS recommended software X-12-ARIMA. Seasonally adjusted house price estimates are used to report monthly percentage changes. All other figures such as annual rates of change and average house prices are based on unadjusted estimates, unless otherwise stated. 

 
Statistical disclosure  
 
Statistical Disclosure Control14 methodology is applied to HPI data. This ensures that information attributable to an individual organisation is not disclosed in any publication. The Code of Practice for Official Statistics set out practices for how ONS protects data from being disclosed. The principle includes a guarantee to survey respondents to 'ensure that official statistics do not reveal the identity of an individual or organisation, or any private information relating to them'. More information can be found on the Statistical Disclosure Control page of the ONS website. 

Summary of the HPI 
What it measures It provides comprehensive information on the change in house prices on a monthly and annual basis. It also includes analysis by country, region, type of buyer (first-time buyers and former owner-occupiers) and type of dwelling (new dwelling or pre-owned dwelling). 

Frequency 
Monthly.  
Period available 
The mix‐adjusted HPI series start in 1969 (on a quarterly basis) and from February 2002 on a monthly basis. 
Data sources  
Since October 2005 the ONS HPI (formerly the DCLG HPI) has been based on a sample of mortgage completions data from the Regulated Mortgage Survey as collected by the Council of Mortgage Lenders. 
Methodology 
The ONS HPI is mix-adjusted to allow for differences between houses sold in 
different months within a year. House prices are modelled using the hedonic model. Movements in these modelled house prices are chain-linked together 
to produce a consistent price index. 
Coverage  
The sample covers all the recorded mortgage transactions from the Regulated Mortgage Survey of the Council of Mortgage Lenders. This sample represents approximately 67% of all mortgage transactions in a given period. 
Re-weighting 
The ONS HPI is a weighted Laspeyres-type index. In January of each year the index weights are updated based on the relative numbers of transactions 
during the previous three years, which are weighted to total transactions obtained from Land Registry. 
Seasonal adjustment 
The housing market shows seasonal effects that affect house prices. These 
seasonal effects are estimated and adjusted for in order to calculate monthon-month price changes. Seasonally adjusted house price estimates are used to report monthly percentage changes.  
The ONS HPI follows a monthly publication schedule and is lagged by two 
Publication schedule  
months. 

Validation and quality assurance Accuracy  
(The degree of closeness between an estimate and the true value.) Estimates from the HPI are subject to various sources of error. The total error consists of two elements, the sampling error and the non-sampling error. 

Sampling error  
 
This occurs because estimates are based on a sample rather than a census; the precision is usually estimated through the calculation of standard errors. Standard errors are not currently calculated for HPI, although the production of standard errors is being investigated for future publication. Non-sampling error  
 
Non-sampling errors are not easy to quantify and include errors of coverage, measurement processing and non-response. Various procedures are in place to ensure that errors are minimised: - 
validation checks on data, based on extreme values within a cell are conducted to highlight potential unusual prices. The combination of each property size and region forms a cell for which an average price is collected; 

- 
data cleaning is done to remove cases with missing data and erroneous data;  
- 
the minimum and maximum values for house price, mortgage advance and total income are 
investigated and if they are deemed to be suspect, they are removed from the dataset; 
- 
the top and bottom 10 house price outliers are validated against external sources; and 
- 
ratio analysis (comparing house price to total income and mortgage advance to total income) is then carried out to check for consistency. 
 Another aspect of quality is reliability. Assessing the difference between the first published estimate and the final revised figure provides an indication of reliability. House Price Index revisions policy, which is aligned with the Code of Practice, is to show significant revisions, but to suppress minor changes to avoid unnecessary inconvenience to users. In all cases, the revised figures are labelled with an 'R' and the reason for the revision explained under the 'New this month' section of the background notes. - 
At the end of every quarter, as well as releasing final figures for the latest month, ONS revises the figures from the previous two months. This is done because some mortgage lenders, which account for 1 to 2% of all records, provide their data on a quarterly rather than monthly basis.  

 - 
Additionally, data will be revised for the previous month if more than 1,000 additional cases are 
received in a subsequent month. 
 
In July 2012 the methodology used to seasonally adjust the HPI was updated following a review, and brings the HPI in line with ONS best practice for seasonal adjustment. Seasonal factors are now estimated on a monthly basis and therefore may result in small revisions to the previous 12 
months data. This updated process improves the accuracy of the seasonally adjusted figures.  
Other revisions to historical data (other than those currently due for revision) will be made only if the revision is substantial. 

The National Statistics website contains information on the HPI revisions policy15. 

 
Coherence and comparability  
(Coherence is the degree to which data that are derived from different sources or methods, but refer to the same topic, are similar. Comparability is the degree to which data can be compared over time and domain for example, geographic level.)   
 
Currently, there are a number of different sources of house price statistics published in addition to  
the ONS HPI. There will be differences in the data published by each source, as there are differences in both the data and methodology used. Therefore, the ONS HPI is not directly comparable with these other indicators. Further details on the differences between official house price statistics can be found in the article Official House Price Statistics Explained9. 

 

Land Registry House Price Index All residential property transactions in England and Wales are recorded by Land Registry. These transactions are used for calculating the Land Registry index. This index is based on repeat-sales regression, which calculates the change in price of any property transacted twice since 1995. Therefore, new build properties are excluded from the index. Land Registry publishes indices at a sub-regional level. The Land Registry HPI is normally published on the 20th working day of every month, and refers to all transactions of the preceding month. The Land Registry HPI can be accessed via the Land Registry's website16. Registers of Scotland Official Quarterly Housing Market Statistics 
 
Registers of Scotland record all the property transactions in Scotland. It produces average house prices based on arithmetic means of these transactions, which is published as the Registers of Scotland Official Quarterly Housing Market Statistics17 in the second month after the month to which the figures refer to. 

 
Northern Ireland Residential Property Price Index The Land & Property Services assisted by the Northern Ireland Statistics & Research Agency 
(NISRA) publish a quarterly Residential Property Prices Index (RPPI) for Northern Ireland18. The index measures change in the price of residential property sales recorded by Her Majesty's Revenue & Customs. This is a new official statistic, first published in quarter one of 2012. Halifax House Price Index and Nationwide House Price Index  
 
Both Halifax19 and Nationwide20 produce house price indices based on their own mortgage approvals only and therefore, like the ONS HPI, will not include any cash transactions. They both have UK-wide coverage, and since the Halifax and Nationwide use only their own in-house data they can process them immediately and do not have to await the receipt of data from other lenders. This means that they are timelier than the ONS HPI. 

 
LSL Acadata House Price Index The LSL Acadata House Price Index (formerly LSL Property Services/Acadametrics HPI) is the only house price index to reflect all transactions, as opposed to data samples, and provides mix and seasonally adjusted results at national, regional and county/unitary district/London borough levels. 

The index can be accessed at LSL Acad HPI21. In addition, other indices are also produced. Rightmove tracks the asking prices of properties on its website and the Royal Institute of Chartered Surveyors (RICS) produces an opinion survey of its surveyors regarding the direction that prices are moving in. 

Full details on the alternative house price statistics can be accessed via the National Statistician's Review of House Price Statistics. Concepts and definitions 
(Concepts and definitions describe the legislation governing the output and a description of the classifications used in the output.) 
The importance of this index is reflected in the development of a European regulation5, introduced in February 2013, which is the first stage in the introduction of owner occupiers' housing costs into the Harmonised Index of Consumer Prices. The regulation identifies house price indices as 
'important indicators in their own right', reflecting the consequences for an economy of unstable or unsustainable house price development. The European regulation also requires state members to provide quarterly house price indices. 

Details on the official house price statistics can be found in the article Official house price statistics explained9. 

 
Furthermore, DCLG provides a list of definitions of general housing terms 

Other information Output quality trade-offs 
(Trade-offs are the extent to which different dimensions of quality are balanced against each other.) A trade-off of accuracy over timeliness is made to produce the monthly HPI. The collection of mortgage transaction data from a range of different lenders across the UK takes time and therefore delays the timely publication of the ONS HPI. Although the availability of accurate and timely house price statistics is desirable, there are a number of obstacles to their production. These are mainly due to the nature of housing compared with other goods. Further details on these issues can be found in the article Official house price statistics explained9. 

 
Assessment of user needs and perceptions 
(The processes for finding out about users and uses, and their views on the statistical products.) As stated previously, there are a number of key uses and users of the HPI. There are also a number of mechanisms via which users are able to provide views on the HPI:  
- public feedback/consultation are sought when methodological improvements are made to the HPI; 
and - suggestions and comments are sought from the public in each publication and via Twitter and Facebook. 

A dedicated HPI email address is provided for users to provide feedback: hpi@ons.gsi.gov.uk The Housing Statistics Network23 is used to canvass opinion and feedback from users to help improve the ONS HPI. 

 
Sources for further information or advice Accessibility and clarity 
(Accessibility is the ease with which users are able to access the data, also reflecting the format in which the data are available and the availability of supporting information. Clarity refers to the quality and sufficiency of the release details, illustrations and accompanying advice.) ONS recommended format for accessible content is a combination of HTML web pages for narrative, charts and graphs, with data being provided in usable formats such as CSV and Excel. The ONS website also offers users the option to download the narrative in PDF format. In some instances other software may be used, or may be available on request. Available formats for content published on the ONS website but not produced by the ONS, or referenced on the ONS website but stored elsewhere, may vary. For further information please refer to the contact details at the beginning of this document. 

 
The latest HPI Statistical Bulletin with accompanying briefing notes and reference tables can be downloaded for free from the ONS website from 9.30 am on the day of publication.  
There is a list of the names of those given pre-release access24 to the contents of this release available. The list is from August 2013. 

The following reference tables are available (please note that these are updated monthly): 

| Table                          | Excel sheet name                               | Purpose    |
|--------------------------------|------------------------------------------------|------------|
| Table 1-19                     | ONS HPI monthly and quarterly reference tables |            |
| (3.32 Mb Excel sheet)          |                                                |            |
| 25                             |                                                |            |
|                                |                                                |            |
| This reference table provides  |                                                |            |
| full historical series for the |                                                |            |
| monthly tables accompanying    |                                                |            |
| the House Price Index          |                                                |            |
| statistical bulletin.          |                                                |            |
| Table 20-39                    |                                                |            |
| 25                             |                                                |            |
|                                |                                                |            |
| This reference table contains  |                                                |            |
| all the annual live tables     |                                                |            |
| transferred to ONS from        |                                                |            |
| DCLG.                          |                                                |            |

General enquiries on the HPI series, compilation methods, developmental articles, quality information or difficulties in finding the latest figures can be emailed to the HPI team in ONS at hpi@ons.gsi.gov.uk. 

 
For information regarding conditions of access to data, please refer to the links below: 

- 
Terms and conditions (for data on the website)26; 
- 
Copyright and reuse of published data27;   
- 
Pre-release access (including conditions of access)28; and 
- 
Accessibility29. 
 In addition to this Quality and Methodology Information, Basic Quality Information relevant to each release is available in the background notes of the ONS HPI statistical bulletin.  
 
Useful links 
 
HPI User Guidance webpage11. 

 
Definitions of general housing terms from DCLG.22 References 

1. Office for National 
Statistics House Price 
Index 
http://www.ons.gov.uk/ons/rel/hpi/house-priceindex/index.html 
2. Department for 
Communities and Local 
Department (DCLG) 
https://www.gov.uk/government/organisations/departmentfor-communities-and-local-government 
3. Council of Mortgage 
Lenders (CML) 
http://www.cml.org.uk/cml/home 
4. National Statistician's 
Review of House Price Statistics 
http://www.statisticsauthority.gov.uk/national-statistician/nsreports--reviews-and-guidance/national-statistician-sreviews/national-statistician-s-review-of-housing-marketstatistics.html 
5. European Regulation 
http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2013:033: 0014:0016:EN:PDF 
6. Guidelines for Measuring 
Statistical Quality 
http://www.ons.gov.uk/ons/guide-method/methodquality/quality/guidelines-for-measuring-statisticalquality/index.html 
7. UK National Statistics 
Publication Hub 
http://www.statistics.gov.uk/hub/index.html 
8. Code of Practice for 
Official Statistics. 
http://www.statisticsauthority.gov.uk/assessment/code-ofpractice/index.html 
9. Official House Price 
Statistics Explained 
http://www.ons.gov.uk/ons/rel/hpi/house-price-indexguidance/official-house-price-statistics-explained/index.html 
10. Hedonic model 
http://www.ons.gov.uk/ons/guide-method/userguidance/prices/hpi/hedonic-model.pdf 
11. HPI User Guidance 
webpage. 
http://www.ons.gov.uk/ons/guide-method/userguidance/prices/hpi/index.html 
12. HPI Methodology from 
DCLG website 
https://www.gov.uk/housing-market-and-house-priceinformation-notes-and-definitions 
13. Guide to seasonal 
Adjustment with X-12-
ARIMA  
http://www.ons.gov.uk/ons/guide-method/methodquality/general-methodology/time-series-analysis/guide-toseasonal-adjustment.pdf 
14. Statistical Disclosure 
Control 
http://www.ons.gov.uk/ons/guide-method/methodquality/general-methodology/statistical-disclosurecontrol/index.html 
15. Revision policy 
http://www.ons.gov.uk/ons/guide-method/revisions/guide-tostatistical-revisions/index.html 
16. Land Registry House Price 
Index 
http://www.ons.gov.uk/ons/external-links/other-governmentdepartments/index.html 
17. Registers of Scotland 
Official Quarterly Housing Market Statistics 
http://www.ons.gov.uk/ons/external-links/other-governmentdepartments/ros--quarterly-housing-market-statistics.html 


18. Northern Ireland 
Residential Property Price Index 
http://www.ons.gov.uk/ons/external-links/devolvedadmins/nisra/nisra--northern-ireland-residential-propertyprice-index.html 
19. Halifax House Price Index 
http://www.lloydsbankinggroup.com/media1/economic_insigh t/halifax_house_price_index_page.asp 
20. Nationwide House Price 
Index 
http://www.nationwide.co.uk/hpi/ 
21. LSL Acadata House Price 
Index  
http://www.acadata.co.uk/acadHousePrices.php 
22. Definitions of general 
https://www.gov.uk/definitions-of-general-housing-terms 
housing terms on DCLG website 
23. Housing Statistics Network 
http://www.housingstatisticsnetwork.org/ 
24. List of pre-release access 
.gov.uk/ons/rel/hpi/house-price-index/august-2013/preml 
25. ONS HPI monthly and 
quarterly reference tables 
(3.32 Mb Excel sheet) 
http://www.ons.gov.uk/ons/rel/hpi/house-priceindex/index.html 
26. Terms and conditions (for 
data on website)  
 
http://www.ons.gov.uk/ons/siteinformation/information/terms-and-conditions/index.html 
27. Copyright and reuse of 
published data  
 
http://www.ons.gov.uk/ons/siteinformation/information/creative-commons-license/index.html 
28. Pre-release access 
(including conditions of access) 
http://www.ons.gov.uk/ons/guide-method/the-nationalstatistics-standard/code-of-practice/pre-releaseaccess/index.html 
29. Accessibility 
http://www.ons.gov.uk/ons/siteinformation/information/accessibility/index.html