Our 20 years work in assessing risk in mortgage books has long included a need to understand house price indices. Accurate assessment of loan to values (LTVs) depends upon the best possible measurement of current house prices. It is the current price which dictates the current collateral upon which a loan is secured and whether, in a worst case, the borrower is in negative equity.

In 1993, Dr Satchell (Economics Fellow Trinity College Cambridge), therefore, studied the methodology behind the lender indices, concluding that even more information than was publicly available was required, if any firm assessment as to the differences were to be reached. In 2001, we commenced development with Dr Satchell of our own house price index,launched as FTHPI and now entitled the LSL Property Services/Acadametrics House Price Index. Dr Satchell with Dr George Christodoulakis designed the academic model used for our LSL Acad HPI “forecast” results which are updated monthly in our LSL Acad HPI, which we have published since September 2003.

We design new indices and are able to prepare the subsequent on-going monthly results, pending the readiness of a client to perform the latter task on a regular basis. Typically, we provide a Feasibility Study which comprises a comprehensive review of all major house price indices, together with any new such index of technical interest, to form a reference document for client internal use. Our Feasibility Study includes an appraisal of the available client data and, provisionally, of the index methodology (e.g. mix adjustment, hedonic regression or other), most likely to be suitable, the options and a projected timescale and costs.