Land Registry sales register lag can cause problems for analysts
HM Land Registry publishes data each month on registered property sales. These figures have only one month's delay and are used to determine sales trends in the recent past. However, there can be a delay in sales being registered and this lag can create misunderstandings. For instance, only 35% of sales registered in December 2016 actually took place in December, and it is this lag that causes issues when trying to identify trends. Some analysis of last year's media reports on falling sales in the top of the London market failed to take this lag into account.

Every month HM Land Registry publish the latest release of registered sales in their very useful price paid data. With only a month delay, it is tempting to use this data to understand what has happened to transactions in the recent past. However, there can be a time lag in when a sale is registered and this lag can cause misunderstandings.

For example, the chart below shows the latest data for sales registered in December 2016. Only 35% of the sales registered during December actually took place in December. 39% of registered sales took place in November, 8% in October, and 0.2% between 1995 and 2015. This lag in when sales are registered can cause issues when trying to identify recent trends in housing transaction levels. The chart below shows how the total transaction count for recent months changes substantially with each new release of registrations. For example, the first release of sales during October 2016 only contained 39% of the sales now contained within the latest December release. It’s for this reason that the sales data available from the official house price index is two months behind the house price series. This Land Registry Lag can be found across all geographies and price bands. Last year there were a number of press stories about falling sales at the top end of the London market. Unfortunately, some of the analysis behind these articles failed to factor in the lag effect. Although there’s been a significant fall in transactions compared to last year, the trend in sales of £1m+ properties since April 2016 has been broadly flat once the lag effect is considered.

Notes: I have used both the standard and additional price paid data for this analysis so as to include all transactions. The Land Registry definitions are:

Standard Price Paid includes single residential property sold for full market value

Additional Price Paid entry including transfers under a power of sale/repossessions, buy-to-lets (where they can be identified by a Mortgage) and transfers to non-private individuals.

The longer-term difference between the HMRC and Land Registry transaction counts in the second chart may be explained by these additional exclusion categories