The New V Index

The new V-index is designed around the short term fluctuations in property prices and the long term trends….in effect a way of linking the two. The basic premise is that since land registry indexing records* began in January 1995 prices in Solihull have on average increased by 0.5% per month cumulative. By cumulative we mean the first month is 0.5%, the second month 0.5% plus 0.5% of the previous months rise…and so on. In effect this equates to an annual growth rate of 6.1678%. The V-index uses land registry indexation data and has anchor points every five months – which are adjusted to give a mean average of the growth over those months, to smooth out very short term fluctuations. The result is then compared to the growth expected on the 0.5% per month indexation rule and a plus or minus (where growth is less than predicted) deviation percentage worked out. The resultant ‘aVerage deViation (V index)’ shows patterns developing over time. Indeed we can back trace the index to January 1995 and look at the ‘aVdeVs’ over various periods since then.
The first reading for the latest information relating to August 2016 is -0.4% which means in effect property prices in Solihull at that point were slightly less than the long term trend growth. The adjusted average index figure was 109.5 compared to a predicted 109.94 giving a difference of -0.44 which is a negative 0.4% of 109.94. Both the land registry index and the V-index have a value of 100 calculation point of January 2015. At the start point for the indices in January 1995 the spot values were 30.27 for the land registry and 30.21 for the V-index. This means overall that on average property prices in Solihull have gone up by over three and a half times (3.62) from January 1995 to the present. In theory a property priced £100,000 then would now be worth in the region of £362,000.

*UK HPI data published by Land Registry © Crown copyright 2016.

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