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Mortgage lenders last night criticised the government's long-awaited "official" monthly house price index, published today, after Whitehall officials admitted that figures would be three months out of date.
Today's government's figures record an average UK house price of £156,273 in July 2003, up from £153,605 in June, and from £138,042 one year ago. They put the annual house price inflation figure for July at 14.6%, up from 13.4% in June.
The new index was ordered by the deputy prime minister, John Prescott, amid concerns that existing surveys often produced a contradictory picture of the housing market.
The government wanted a better indicator than its 35-year-old quarterly index, used by the Bank of England when setting interest rates - and ignored by almost everyone else.
The plethora of indices has left policymakers and homebuyers bewildered.
One index, Rightmove, which is also published today, puts annual house price inflation nationally at 9.1%, while at the other end of the scale, Halifax says it is 19.1%. According to Halifax, the average property at present costs £133,908, while Rightmove says the figure is £165,265.
The new index uses data from the completion price of about 25,000 homes bought with mortgages. Officials believe this means a more accurate reflection of the market because uses the price at which a property is sold, rather than the advertised selling price used by some other indices.
Along with the land registry, Halifax and Nationwide, two of Britain's biggest lenders, operate the most respected house price indices. Both lenders issued warnings about the methodology of the new index.
Nationwide and Halifax use their monthly indices to illustrate recent house price activity by basing them on the number of sales approved each month. This means that figures can be released as soon as a month has ended.
Because the new government index relies on confirmed completions as well as collecting data from 50 separate lenders, however, the amount of time it takes for each set of monthly data to reach publication could be as long as 12 weeks.
"It takes time to process the data from as many as 50 different lenders; Halifax and Nationwide use their own in-house data," a government spokesman said. "After the launch we will investigate with the Council of Mortgage Lenders the possibility of reducing the time lag."
Critics say the delay could render the information useless, because homebuyers want the most up-to-date indication of price. The government said its index would be an "important addition" to the established indices, not a definitive substitute for them.
The index will also differ in using non-seasonally adjusted changes, meaning that the top line statistics will not take into account traditional downturns in demand, such as the hiatus in the summer months.
One housing analyst said: "There are a number of flaws with the index, but one of the most important is that it is not seasonally adjusted.
"If ever there was a seasonal market, it's the housing market. And information that is three months out of date is of no use to policymakers. Policymakers depend on up-to-date information."
Officials admitted the index would not be definitive because the figures released would not include the 25% of sales paid-for with cash.
They added that it could be six or seven years before the index became a comprehensive UK indicator because figures for Northern Ireland and Scotland are not included, and no discussions are under way to change the situation.
The housing minister, Keith Hill, said: "Interest in the private housing market continues undiminished, and this new official house price index is an exciting development that will provide a clearer indication of the state of the market."
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