Ian King, in his Times Business editor’s commentary, bemoaned the loss of a great chance to cut government waste.
His ire was sparked by the first publication by the Office for National Statistics of the official House Price Index, which they have taken over from the Department of Communities & Local Government.
Totally unnecessary, he says, we already have at least four other indices (3 from the private sector).
Well each is entitled to his own opinion, & ONS have had a few problems getting the numbers right recently, but I bridled at his suggestion that the government’s House Price Index is a mere hangover from the days when the Department of Communities etc was ‘created to make John Prescott appear important.’
The House Price Index did not make its first appearance at that time. In fact it dates all the way back to 1965, when it was the 5% Survey of Building Society Mortgages, devised & implemented by the then Ministry of Housing & Local Government, under Richard Crossman.
In those days housing was still high on the political agenda (though not as high as it had been under Macmillan) & government statisticians collected a plethora of data about what we now call social housing – how much, where, at what cost, tenancies & rents – but little about the owner occupation to which the population increasingly aspired. There were also growing complaints about the availability of mortgage finance, for its lack during periods of mortgage famine, or for the kind of house which building societies considered to offer suitable security for loans of their depositors’ money.
Much has changed in the ensuing near half-century, & the original mortgage survey adapted to reflect both changes in the way we are housed & who finances it, as well as changes in the technical background of computing.
The government no longer has a housing policy based on a belief that it is their job to ensure that every family should have a decent home of their own – in part because it is no longer so easy to define the kind of ‘family’ which deserves this.
But housing finance, as we have learned to our cost, plays an even more central part in the economy; changes in house prices are a subject not only for dinner party conversation but for measures of inflation & also the value of our national balance sheet. And index numbers – together with seasonal adjustment - fall into an area of very special statistical expertise.
For this reason the National Statistician led a Review of House Price Statistics which reported in 2010. Consultation was wide - all private sector interests in house price statistics were well represented – and the decision to move this work to ONS was the result.
The report of the Review covers the ground impressively in non-technical (& non-mathematical) language, with some helpful graphics, which explain why different indices use different measures of what is meant by the ‘price’ of a house, and/or cover different segments of the market.
The conclusion was that an official national index is indeed required to meet the wider economic requirements.
And also to meet our obligations, & need for, measures which are internationally comparable in a world where issues of home ownership & finance affect global economic well being.
I keep my fingers crossed & wish the official statisticians well in their new enterprise
Links
An Overview of the Building Societies Mortgage Survey: Donal McKillop and Liam Barton
[PDF]National Statistician’s Review of House Price Statistics
[PDF]National Statistician’s Review of House Price Statistics
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