Halifax House Price Index: What It Measures, How It's Calculated and Its Limitations

What the Halifax House Price Index Is

The Halifax House Price Index (Halifax HPI) is a monthly measure of UK residential property prices published by Halifax, which is part of Lloyds Banking Group. It has been published in various forms since the early 1980s, making it one of the longest-running house price series in the UK. It is widely cited in media coverage of the property market.

The index is based on Halifax's own mortgage approval data — the prices paid for properties where Halifax provided the mortgage finance.

The Methodology

Halifax uses a hedonic regression model to produce a standardised house price measure. The approach works as follows:

**Data collection**: Each month, Halifax compiles transaction data from its own mortgage approvals. This includes the purchase price, property type, location, size (where available), and other characteristics.

**Mix adjustment**: Raw average prices are distorted by the changing mix of properties sold each month. A hedonic regression controls for this by modelling the relationship between price and property characteristics, allowing Halifax to produce a "standard property" price that can be compared over time.

**Seasonal adjustment**: The index is published in both seasonally adjusted and non-seasonally adjusted forms. Seasonal adjustment removes predictable patterns — higher spring volumes, quieter Decembers — to make month-on-month comparisons more meaningful.

The output is expressed as an index relative to a base year, and as an average house price figure in pounds sterling.

Sample Size

Halifax processes a large volume of mortgage approvals each month, but the sample is still a fraction of total market activity. Residential transactions in England and Wales typically run at 80,000–120,000 per month. Halifax's mortgage market share is approximately 15–20% of new mortgage lending, suggesting the monthly sample underpinning the index may be in the region of 10,000–20,000 transactions.

This is a large sample in absolute terms, but the sub-indexes — by region, property type, or buyer type — are based on materially smaller samples and carry higher uncertainty.

Known Limitations

**Excludes cash buyers**: Halifax data covers only mortgaged purchases. Cash buyers represent approximately 30% of all residential transactions. Cash buyers are not randomly distributed across the market — they are disproportionately present in certain price brackets, age groups, and geographic markets. Excluding them can bias the overall figure.

**Reflects Halifax's customer base**: Halifax's lending criteria, geographic footprint, and product range shape the population of borrowers in its data. Halifax tends to be active in mainstream residential lending, which means very high-value properties (which are more likely to be cash purchases or arranged via private banks) are underrepresented.

**Mortgage approval vs completion**: Halifax records data at mortgage approval stage, not at legal completion. In a period of rapidly changing market conditions, approval-stage data may reflect market sentiment from several months earlier.

**Revision policy**: Monthly data is revised as more transactions filter through the system. An initial monthly figure may be revised in subsequent months. Compare data vintages carefully when using historical Halifax HPI data.

How It Compares With the ONS UK HPI

The ONS UK House Price Index is based on all registered completions, covers cash and mortgaged buyers, and is considered the official government measure. It has a longer publication lag (typically two to three months) but is more comprehensive.

For any given period, the Halifax HPI and ONS UK HPI will generally tell the same directional story over a 12-month period. They can diverge on a month-to-month basis for the structural reasons above — particularly when cash buyer activity is moving differently from mortgaged buyer activity.

Practical Uses

The Halifax HPI is most useful for:

• Rapid indication of directional market movement (it publishes faster than ONS)
• Long-run historical trend analysis (the series goes back to the 1980s)
• Comparing broad regional trends, with the caveat that sub-index samples are smaller

It is not suitable for:

• Valuing a specific property (use HMLR comparable sales data for this)
• Making precise claims about annual price changes (use ONS for this)
• Assessing market conditions in niche segments where Halifax's lending footprint is thin

For individual property research, HMLR Price Paid Data — available via Property Passport UK — provides the actual sale prices of specific comparable properties, which is far more useful than any aggregate index.