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The awareness is growing of discrepancies between house price indices

7th September 2008 | back to article listings BACK    print this article PRINT

Following my last blog entry on the rather worryingly large differences between different house price indices ranging from plus 0.3% to -10.9% the FT have taken up the argument and there is a very interesting podcast at podcast.ft.com/, just select the September 4 2008 Money Show in which I was interviewed.

There was also this brief article in the Financial Times this weekend ;
Indices diverge on house prices - www.ft.com/cms/s/0/ca071af2-7b76-11dd-b839-000077b07658.html

This argument isn't going to go away but the fact remains the financial times house price index contains the best mortgage data, above and beyond the smaller Halifax and Nationwide samples, is lagged no more than these other sources initially and within three months contains 99% plus of the exact land registry data. This index is near perfect for the country as a whole and in today's extreme circumstances the other indices do not appear fit for the purpose of being declared as indicative of the nation as a whole. They are only indicative of their own datasets including for example Halifax mortgage customers valuations carried out.

More misquotes from people who should know better - this time Capital Economics again where Seema Shah says house prices are down 10% already when in fact Land Registry shows they are not, as does the FT HPI using the whole of Land Registry data and wider mortgage data. I give my view too. See the two points of view at www.timesonline.co.uk/tol/money/property_and_mortgages/article4676879.ece

Prices are down from their peak on some properties and some locations for sure and I wouldn't want to be a forced seller in this market but this is a stand-off, not a crash in any way.

As the market is now being driven by sentiment it is extremely important that the state of the housing market is not misrepresented by people with other motives, and only the best possible all-of-market data is used when describing it as the country's housing market performance.

ps. It does look like the Halifax is now getting embarrassed about its own data and is trying to get the spotlight turned away in case people picked too many holes in it now :
Halifax warns media against publishing false numbers - http://www.moneymarketing.co.uk/cgi-bin/item.cgi?id=172395&d=340&h=341&f=342

This news story has come from the property investment blog by Stuart Law, CEO Assetz plc.

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