If you are interested in knowing exactly what is going on in the UK housing market there is a wealth of information you can tap into.

House price indices provide useful overviews of the market, but the range of indicators means that not all tell the same story. In December last year, Nationwide and Halifax, two of the main indices, differed on the direction of house price growth. Halifax reported a fall while Nationwide announced an increase.

According to the latest Nationwide figures, house prices are still moving up, with the average house costing an extra £15,000 over the past year. Despite interest rate rises from the Bank of England it looks as though first-time housebuyers are still facing reduced affordability and accessibility.

Figures from the Land Registry, released this week, concur. House prices are still rising, which Warren Bright, chief executive of Propertyfinder.com, believes reflects buoyant confidence in the housing market thanks to a lack of supply.

The differences in results occur because house price indices use different factors when calculating their statistics, so it is important to be aware of these when looking at the information.

Which are the main house price indices?

The main monthly indices are compiled by the Financial Times, Nationwide and Halifax.

Are there any others?

Rightmove (www.rightmove.co.uk), the property website, has an index that looks at the average change in asking prices of properties for sale on its website.

The Department for Communities and Local Government, or DCLG (www.communities.gov.uk), Hometrack (www.hometrack.co.uk), the property research company, and the National Association of Estate Agents, or NAEA, (www.naea.co.uk) also produce indices. Your Move, the estate agent, is also soon to release an index that will anticipate Land Registry figures by two months.

How does the FT’s index work?

The FT house price index was designed to end confusion about house prices. It uses data from the Land Registry to measure every property sold in England and Wales. It only includes data from properties that have been sold, rather than all those where a mortgage is agreed, and excludes Scotland and Northern Ireland.

Because it looks at completions the FT’s index is the most accurate, although the data can take a few months longer to arrive than that of the mortgage lenders. Data for recent months is estimated and then updated when the figures are complete.

How do the other indices differ?

The main difference between the indices is the methodology used in collecting data. Halifax and Nationwide, the two largest mortgage lenders, produce figures based on samples of the properties they lend on.

They also use “hedonic” data. This is a way of approaching data that tries to strip out differences in properties such as location or features such as garages. Adjustments are made for different property types by weighting certain features. This is then used to measure changes to a “typical” house – the average of all the percentage changes of all moves made.

The indices from Rightmove, Hometrack and the DCLG are value weighted – they take all transactions made, add up the values and then divide that by the number of houses.

The index from the NAEA uses a very small survey of the association’s members on average asking prices.

The Land Registry also recently launched a method of working out house price inflation that looks at properties that have been sold repeatedly, so comparing like with like, which many experts consider the best way to look at changes. This index has only been running for a few months so has not yet built up a useful track record.

What are they useful for?

A wide range of people use house price index information, including individuals and official bodies.

Allen Ritchie, head of research at the Statistics Commission, the government watchdog, says that it is hard to say that one methodology is better than another as the usefulness depends on how narrow the scope of information is that you are looking for.

Are indices useful to look at if I’m selling my house?

House price inflation can vary excessively, so an overall house price index is only going to paint a very broad picture. Monthly house price indices also won’t tell you much about the prices of houses in your area.

Monthly indices can be volatile, says Oliver Gilmartin, an economist at the Royal Institute of Chartered Surveyors. So sometimes it is
better to look at longer-term averages.

If you are interested in house prices in your area the Land Registry can provide information by postcode of the report from the county council, unitary authority or London borough. Websites such as www.houseprices.co.uk and www.nethouseprices.com allow you to see the sale price of houses in your area if you put in a postcode.

What other issues should I be aware of?

Gilmartin says that the effect of improvements to a property cannot be taken out of the indices and will affect the data. If a homeowner has spent £5,000 redecorating their house before sale then part of the reason for an uplift in its price will be as a result of the improvements, not just the market-driven changes.