Nationwide House Price Index: Actually, prices went up
By Ray Boulger
Last Updated: 8:25PM BST 01 May 2009
These factual figures paint a rather different picture from the "doctored" – or seasonally adjusted, to use the technical term – figures that Nationwide has focused on.
Nationwide and Halifax always focus on the seasonally adjusted figures in their monthly house price surveys. Their comments are always based on these "doctored" prices, but although their press releases state that the figures are seasonally adjusted this can be misleading.
A glance at the Nationwide figures since the beginning of last year makes it clear how big an impact the seasonal adjustments have in some months.
Based on last year's seasonal adjustments the following three months will not see a significant difference between the percentage change in the real figures and the "doctored" ones, but in August the impact of seasonal adjustment will be to improve the real figure by about 1pc, the opposite of what has happened in each of the past two months.
Halifax, for some reason best known to itself, refuses to disclose the real figures in its monthly press releases and only belatedly publishes them on a quarterly basis. Nationwide, despite always ignoring the real figures in its comments, does include them every month in its table of historical data.
This is helpful to anyone like me who prefers to use real figures rather than "doctored" ones based on someone's view of the seasonal impact on prices. In current market conditions it is even more difficult than usual to decide how much price changes are influenced by seasonal factors and I would be very surprised if two economists came to the same conclusion on the correct adjustment required.
The housing market is, of course, seasonal, but many other factors also have an important influence on prices, particularly consumer confidence, interest rates and the availability of credit. Until recently the latter factor had not been a significant problem since the mid 1980s and so perhaps Halifax and Nationwide should have adjusted house prices over the past 18 months to take account of the restricted mortgage availability.
Perhaps they should also adjust for changes in consumer confidence and interest rates. If they manage to get all these adjustments right, house prices adjusted for all these factors would permanently change only very slowly in line with wage inflation, resulting in "no more boom and bust".
Come to think about it, Gordon Brown has missed a trick here in not passing legislation requiring all house price indices to be calculated in this way.
I intend to publish updated figures of the "Real" Nationwide House Price Index every month on my blog.
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FFS, if in some month house prices ALWAYS falling due to seasonal factors then this info should be published AS IS so that people would clue up and maybe start buying in that "seasonally" bad period, that should actually be welcome by sellers to smoothen out those "seasons".
By Ray Boulger
Last Updated: 8:25PM BST 01 May 2009
These factual figures paint a rather different picture from the "doctored" – or seasonally adjusted, to use the technical term – figures that Nationwide has focused on.
Nationwide and Halifax always focus on the seasonally adjusted figures in their monthly house price surveys. Their comments are always based on these "doctored" prices, but although their press releases state that the figures are seasonally adjusted this can be misleading.
A glance at the Nationwide figures since the beginning of last year makes it clear how big an impact the seasonal adjustments have in some months.
Based on last year's seasonal adjustments the following three months will not see a significant difference between the percentage change in the real figures and the "doctored" ones, but in August the impact of seasonal adjustment will be to improve the real figure by about 1pc, the opposite of what has happened in each of the past two months.
Halifax, for some reason best known to itself, refuses to disclose the real figures in its monthly press releases and only belatedly publishes them on a quarterly basis. Nationwide, despite always ignoring the real figures in its comments, does include them every month in its table of historical data.
This is helpful to anyone like me who prefers to use real figures rather than "doctored" ones based on someone's view of the seasonal impact on prices. In current market conditions it is even more difficult than usual to decide how much price changes are influenced by seasonal factors and I would be very surprised if two economists came to the same conclusion on the correct adjustment required.
The housing market is, of course, seasonal, but many other factors also have an important influence on prices, particularly consumer confidence, interest rates and the availability of credit. Until recently the latter factor had not been a significant problem since the mid 1980s and so perhaps Halifax and Nationwide should have adjusted house prices over the past 18 months to take account of the restricted mortgage availability.
Perhaps they should also adjust for changes in consumer confidence and interest rates. If they manage to get all these adjustments right, house prices adjusted for all these factors would permanently change only very slowly in line with wage inflation, resulting in "no more boom and bust".
Come to think about it, Gordon Brown has missed a trick here in not passing legislation requiring all house price indices to be calculated in this way.
I intend to publish updated figures of the "Real" Nationwide House Price Index every month on my blog.
----------
FFS, if in some month house prices ALWAYS falling due to seasonal factors then this info should be published AS IS so that people would clue up and maybe start buying in that "seasonally" bad period, that should actually be welcome by sellers to smoothen out those "seasons".
