Economix: Using Google Searches to Track Housing Prices

The Bank of England has started to use Google search data to help it spot trends in Britain’s housing and labor markets.

There is a strong correlation between how often people search online for “estate agents” and actual house prices, two Bank of England researchers wrote in a report on Monday.

The central bank is now monitoring online search terms like “mortgage” and “house prices,” or “jobs” and “unemployed,” to get a more up-to-date picture of the state of the economy. The Bank of England previously depended only on data like property sales or unemployment figures, which are usually published with a delay.

Nick McLaren and Rachana Shanbhogue, Bank of England

“Monitoring current economic activity closely is an important aspect of policymaking, but official economic statistics are generally published with a lag,” Nick McLaren and Rachana Shanbhogue wrote in the bank’s quarterly bulletin. “Internet search data can help predict changes in unemployment in the United Kingdom. These appear to be as useful as existing indicators. For house prices, the results are somewhat stronger.”

The report also pointed toward possible problems with the data. “The data have a short backrun compared to other economic indicators,” the two researchers wrote.

The data are also unlikely to cover every household in Britain, they said. Not everyone searches for homes or jobs on the Internet, and people use different search terms to do so.

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