Click here to see the rival views of the market

House price surveys have never been so controversial. As Bricks and Mortar discussed last week, a vocal minority - which believes that the property market is heading for disaster - claims that data from Halifax, Nationwide and others give a falsely optimistic view. This row has revealed widespread confusion over the statistics on house prices. This arises largely from the different methods used to calculate each survey. As the homeowner who wants to stay informed needs to watch every one, we show how to read between the lines.

HALIFAX HOUSE PRICE INDEX

Halifax figures cover all the UK, but are based on prices agreed for properties on which the bank has arranged mortgages. So there is a bias towards the areas where it does most of its lending - in Halifax's case, to the North.

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The Halifax index is mix-adjusted: it is designed to reflect the price of a “typical” property, taking into account location, type of property, square footage and other characteristics. This is done to avoid the problems raised by simple averages: so a preponderance of large, expensive country houses selling in one period might give a misleading picture. Halifax seasonally adjusts its figures, too: during the spring and the summer, when house prices tend to be higher, it will tweak its figures to reflect this.

Verdict: 0%house-price growth in January

NATIONWIDE

“Nationwide is the longest-running house price series in the UK - it has been reporting house price figures since 1952,” says Fionnuala Earley, Nationwide's chief economist. Like the Halifax figures, Nationwide's index is based on prices agreed for properties on which it has lent. Nationwide tends to have a bias towards the South. Nationwide's figures are also mix-adjusted and seasonally adjusted and take into account a number of housing characteristics, including the size of the property in square metres and the neighbourhood. Nationwide makes a number of other adjustments to its figures: it excludes buy-to-let properties and those which it deems “untypical”, such as properties worth more than £1 million.

Verdict: -0.1 per cent in January

COMMUNITIES AND LOCAL GOVERNMENT

The Communities and Local Government department carries out a monthly survey of 50 mortgage lenders, taking the prices of properties that have completed during that month. Its sample size is therefore much bigger than that of Halifax or Nationwide. However, like the Halifax and Nationwide indices, CLG's figures are based on mortgage data and so exclude all properties bought for cash, which make up one quarter of all home sales. CLG's slow-to-appear figures are mix-adjusted, but not seasonally adjusted, and are for England and Wales only.

Verdict: -0.8 per cent in November

LAND REGISTRY

The Land Registry records all property sales in England and Wales. Because it shows sales prices, it gives an accurate snapshot of what is happening in any one month. It has its drawbacks. Its data comes from the registration of completed property transactions, so its figures lag behind many other indices: in January 2008 we are looking at what happened in last November. And the data does not reflect the value of the many houses that are remortgaged each month.

The Land Registry also uses simple rather than mix-adjusted averages. So if you get lots of very expensive properties selling in one period and lots of cheaper ones in the next, you would get an average falling price, which would be misleading. However, if you are looking at large volumes of data - for example, national averages rather than averages for an individual postcode - then simple averages tend to work well. Another strength of the Land Registry index is that it uses “repeat sales regression”: you can contrast the price of a property today with its price in the past - you know that you are comparing like with like because it is the same house. Verdict: 0.6 per cent in November

RIGHTMOVE AND PRIME- LOCATION

The average house price given by Rightmove in January this year is £44,000 higher than the most recent figure given by the Land Registry, which may reflect that Rightmove uses the asking prices of properties placed on its website. Prices come from 12,600 estate agency branches and the sample includes up to 200,000 homes each month - about 90 per cent of the market, it says.

Primelocation, a smaller rival that has traditionally focused on prime property, also records asking prices; the average price of those on its website is £371,057.

Verdict (Rightmove): -0.8 per cent in January

HOMETRACK

Hometrack gathers data from 3,500 estate agents across all postcodes in England and Wales. Results are based on answers to a standard questionnaire on price and a range of factors, such as the time it takes to sell, the number of viewings per sale and achieved price as a percentage of the asking price. Because its statistics are not based solely on transactions, Hometrack's research reveals trends that other indices might miss. “Take the boom which occurred over 18 months in 2006 and 2007: we found that house prices were only going up in around one third of the market,” says Richard Donnell, the director of research at Hometrack.

Verdict: -0.5 per cent in January

FT ACADAMETRICS

The FT house price index is based on Land Registry data, but there are important differences between its results and those of the Land Registry. Acadametrics has sought to deal with the issue of the time lapse in the Land Registry index by providing an initial FT “forecast” index, followed by two FT “updated” indices. After three months, once most property transactions have been recorded with the Registry, the index is based on actual transactions.

Verdict: 0.1 per cent in January

CHESTERTON

Chesterton, the estate agency, publishes a “poll of polls”, compiled by the Centre for Economics and Business Research. The poll analyses the figures from a range of indices, taking into account their strengths and weaknesses. “It creates an accurate picture of the wider UK market,” says Robert Bartlett, Chesterton's chief executive.

Verdict: -0.3 per cent in January

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