IHS MARKIT BENCHMARK ADMINISTRATION: HALIFAX HOUSE PRICE INDEX

IHS Markit Benchmark Administration: consultation on a proposed Methodology change for the Halifax House Price Index family

18 December 2018


Background
On 10 September 2018, IHS Markit Benchmark Administration Limited – the Administrator (as defined by the International Organisation of Securities Commissions Principles for Financial Benchmarks - the “IOSCO Principles” and the European Benchmark Regulation – “BMR”) of the Halifax House Price Index (“HHPI”) family – opened a consultation with users and stakeholders of HHPI regarding a proposed change to the HHPI methodology. The proposed change is designed to address the impact of alterations in the structure of the UK housing market over the past 35 years and the reduced influence of certain property characteristics on UK house prices.

User consultation
A large number of users of the HHPI family of indices responded to the consultation note, stating a desire to receive the following:
• Detailed documentation on the changes to the HHPI methodology;
• An assessment of the impact of the changes and demonstration of the improved performance derived using the new methodology; and
• Historical HHPI data calculated using the new methodology.

The Administrator subsequently provided those respondents with all the information outlined above and additionally conducted follow up meetings/calls to answer any further questions from users and stakeholders.

Whilst users and stakeholders of the HHPI expressed appetite for and acceptance of the improvements to the methodology being proposed, they also expressed concerns around the timeline originally presented, indicating that this would not provide sufficient time for internal impact analysis to be conducted and regulatory approval to be attained.

Decision and next steps
As Administrator of the HHPI, the Administrator is satisfied with user acceptance of the new HHPI methodology with no further amendments to the proposed methodology.

In response to feedback from users in relation to the timeline for transition to the new HHPI methodology, the Administrator has decided to postpone the implementation of the change in methodology. The Administrator is committed to continue to produce and provide users with all HHPI series generated using the existing HHPI methodology until at least 1 July 2020. Where users require this, the Administrator will also provide in parallel, HHPI series generated using the new HHPI methodology. Parallel run HHPI data, generated using the new HHPI methodology, will be available from the release of Q1 2019 data in April 2019, with data for all HHPI series generated using the new HHPI methodology made available as far back as 1983 (including English regional HHPIs).

Any decision by the Administrator to begin using the new HHPI methodology to generate house price data to be published in the monthly and quarterly HHPI press releases prior to 1 July 2020 will be communicated to all users with a minimum of three months’ advance notice. To be clear, in such a scenario, the Administrator will continue to provide users with all HHPI series generated using the existing HHPI methodology until 1 July 2020.

Should you have any questions, please contact us at
MK-IndexAdminConsultation@ihsmarkit.com.