Letter: Myth of magic index for house prices

Sir: May we attempt to hold the ring between David Gilchrist (letter, 10 June) and Yolande Barnes (letter, 17 June) on the subject of residential property prices?

Mr Gilchrist was correct to be critical of the use of anecdotal evidence to question the figures from the Halifax Building Society, based on a sample of some 12,000 transactions. Ms Barnes was right to point out that the omission of cash purchases can clealy bias an index which purports to cover all properties (although our estimate for the most recent 12 months was 17 per cent, rather than the 28 per cent quoted by Ms Barnes).

The compilation of price indices are useful for professionals to look ahead to the kinds of money they will be asked to provide (in the case of lenders) and the orders of revenue they may expect to receive (where these are on a commission basis). They are of no value to the individual buying or selling a property. The hundreds of thousands of properties on the market at any one time comprise an enormous range of qualities, the values of which can only be determined between a buyer who is interested in the property and a seller who is interested in the offer. Small percentage changes from month to month in any index have little bearing on this situation.

Yours sincerely,

TINA NEWPORT

Director

James R. Adams & Associates

London, WC2

20 June