This document summarizes an ongoing project to estimate residential land prices in the UK using available data sources. The project aims to address the lack of recent land price data by combining Land Registry transaction records with Ordnance Survey maps of land parcels and buildings. A regression analysis is used to decompose reported house sale prices into estimates of land and structure values based on property size. The results will help plug the gap in UK land value statistics and provide insight into housing market dynamics.

1. Estimating Residential Land Prices in the UK
Philippe Bracke
Bank of England1
PyData
London, 8 May 2016
1
DISCLAIMER: The views expressed are those of the author, and not those of the Bank of England

2. House prices
100
150
200
250
300
Index(1995m1=100)
1995m1 2000m1 2005m1 2010m1 2015m1
Month
Source: England and Wales Land Registry

3. House = Structure (building) + LandLAND REGISTER
LAND CADASTRE
ILDINGS CADASTRE
CENTRAL
POPULATION
REGISTER
w a house could be
Figure 6.2: The structure of the combined value of a real
estate
Value of the house
including plot on which
the building stands
(VHouse)
Value of the land
ancillary to the house
i.e. parcel including
yards and gardens as
part of the house

4. Land is more interesting than structure
Value of structure = building cost ( − depreciation)
100
150
200
250
300
Index(1995=100)
1995 2000 2005 2010 2015
Year
House prices Building costs
Source: England and Wales Land Registry, Office for National Statistics
and Department for Business, Innovation & Skills

5. Land is more interesting than structure
But no land price data after 2010!
100
200
300
400
500
Index(1995=100)
1995 2000 2005 2010 2015
Year
House prices Land prices
Source: England and Wales Land Registry, Valuation Office Agency

6. Current lack of land price data is a serious problem
Terminating the publication of this data makes it much harder for government to
understand the consequences of current policy interventions or to assess the case
for future reform.
Open letter to the Government, December 2013
by Kate Barker (Barker Review of Housing Supply, former Bank of England
Monetary Policy Committee), Paul Cheshire (Professor at the London School of
Economics) and others
Inadequate land market statistics potentially hinder a suitable (public and private)
supply response to the housing shortage.
Review of UK Economic Statistics, March 2016
by Charlie Bean (former Deputy Governor of the Bank of England)

7. This project
Using available data to plug the gap in UK land value statistics
1. Collect and combine data
England and Wales Land Registry
Ordnance Survey
(Royal Institution of Chartered Surveyors
Building Cost Information System)
2. Estimate land and structure values for properties
in the Land Registry Price Paid dataset
3. Create local and aggregate land price indices

8. This project
Method
For each transaction of a freehold house in England and Wales between 1995 and now,
we decompose:
Price
Available from LR Price Paid
= Structure value
TO ESTIMATE
+ Land Value
TO ESTIMATE

9. Section 1
Data

10. Land Registry Price Paid dataset
England and Wales, 1995-2014
price postcode paon saon street date
218,000 NW5 1HZ 10 MAIDEN PLACE 26-Jun-97
525,000 NW5 3BT 32 1ST FLOOR FLAT INKERMAN ROAD 31-Oct-10
455,000 NW5 1RF 6 COUTTS CRESCENT 09-Jul-98
2,325,000 NW5 1PL 22 GROVE TERRACE 20-Dec-10
... ... ... ... ... ...
Publicly available: https://www.gov.uk/government/collections/price-paid-data

11. Land Registry land parcels: Maps
Publicly available: https://www.gov.uk/guidance/inspire-index-polygons-spatial-data

12. Land Registry land parcels: Maps
London Borough of Camden

13. Geographic Information System (GIS)
System designed to capture, store, manipulate, analyase, manage, and present all
types of spatial or geographical data.

14. Quantum GIS (QGIS)
open source software
viewing, editing and analysis for geographic points, polygons and vector/raster
map layers
scripting support using Python
automatically run Python code when QGIS starts
issue commands in Python console within QGIS
create and use plugins in Python

15. Buildings (structure)
Ordnance Survey (OS) MasterMap
Commercial product, available to Government departments
Map of 450m objects found on the GB territory: buildings, water, roads, ...
−→ We use it for calculating the size of residential buildings

16. Buildings (structure)
Building footprint: included in OS MasterMap as attribute; could be computed by
QGIS
Building height: included in OS MasterMap as attribute

17. Matching land and buildings

18. Matching land and buildings (cont’d)
MMQGIS: a set of Python plugins for QGIS
CSV input/output/join, Geocoding, Geometry Conversion, Buffering, Hub
Analysis, Simplification Column Modification, Color Ramps, and Simple
Animation
We are interested in Combine tools:
Merge layers
Spatial join
http://michaelminn.com/linux/mmqgis/

19. Matching land and buildings (cont’d)

20. Matching building-land to LR Price Paid
OS AddressBase: complete set of all addresses (residential and commercial) in Great
Britain
LR Price Paid
pcode,street,...
←−−−−−−−−− AddressBase
building id
←−−−−−− MasterMap

21. Section 2
Estimation

22. From building sizes to building values
Price = Building value + Land value
Two scenarios:
1. We have data on construction costs (and possibly depreciation) → Residual
method
1.1 Estimate Building value
1.2 Land value = Price − Building value
2. We don’t have data on construction costs →
Regression method
2.1 Price = β1 Building size (m2
or m3
) + β2 Land size (m2
)
[Run regression analysis]
2.2 β1 = implied structure value per m2
or m3
β2 = implied land value per m2

23. Royal Institution of Chartered Surveyors (RICS) Building Costs
Information System (BCIS)
Average residential building costs per square meter (floor area)
By local authority and year
Depreciated replacement cost valuations (insurance)

24. This presentation
No data on construction costs (yet) →
Regression method
NW5
SN25

25. A tale of two postcodes
0
500,000
1,000,000
1,500,000
2,000,000
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
Average house price
0
200
400
600
800
1,000
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
Sales
SN25
0
500,000
1,000,000
1,500,000
2,000,000
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
Average house price
0
200
400
600
800
1,000
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
Sales
NW5

26. SN25 (Swindon)

27. SN25 (Swindon)

28. Variables
0
200
400
600
800
Landarea
0 50 100 150 200
Building area
Building area = Land area
0
100,000
200,000
300,000
400,000
500,000
price
0 50 100 150 200
Building area
0
100,000
200,000
300,000
400,000
500,000
price
0 200 400 600 800
Land area
SN25
0
100
200
300
400
500
Landarea
0 50 100 150 200
Building area
Building area = Land area
0
1,000,000
2,000,000
3,000,000
price
0 50 100 150
Building area
0
1,000,000
2,000,000
3,000,000
price
0 100 200 300 400 500
Land area
NW5

29. Regression 1
P = β1L + β2S by year
0
2,000
4,000
6,000
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
SN25
0
2,000
4,000
6,000
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
NW5
Land
0
5,000
10,000
15,000
20,000
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
SN25
0
5,000
10,000
15,000
20,000
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
NW5
Structure

30. Regression 2
P = β1L(by year) + β2CS
-2,000
0
2,000
4,000
6,000
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
SN25
-2,000
0
2,000
4,000
6,000
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
NW5
Land
0
2,000
4,000
6,000
8,000
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
SN25
0
2,000
4,000
6,000
8,000
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
NW5
Structure

31. Conclusion
Land prices: a big gap in UK statistics
Solution by putting together existing data sources
Merge geographic data using Python code and QGIS
Work in progress...
THANK YOU!