UK homeowners: property prices have gone up faster than you thought

[LONDON] Housing-obsessed Britons have something new to fixate on: property prices may have increased more than previously thought.

A new official house-price index, designed by the Office for National Statistics, shows values rose an annual average of 6.1 per cent between 2003 and 2011. That's substantially more than the Land Registry's estimate of 4.6 per cent.

The updated methodology seeks to clarify the often conflicting picture painted by a multitude of price indexes published in the UK With the various measures - including two separate official gauges - regularly diverging on the direction of values, the ONS has been working since 2010 on this all- encompassing measure.

The UK House Price Index, to be published for the first time in June, will replace the existing official ONS and Land Registry measures and is designed to address their limitations. The current ONS data doesn't capture cash purchases, which account for as much as 40 per cent of all transactions, while the Land Registry doesn't include sales of new builds.

The impact of these changes mean the new index shows the average home price in December 2011, the most recent period covered in the ONS estimates, as being 185,000 pounds (US$267,000) in England and Wales. This is lower than the 222,000-pound price recorded by the current ONS gauge for England for the same month, and above the equivalent 157,000-pound level recorded by the Land Registry.

It's also above privately produced house-price indexes by Halifax and Nationwide, which showed the overall UK average as 157,000 pounds and 163,000 pounds respectively.

BLOOMBERG