Data on house prices are often unreliable. The government doesn’t actually have a national official house price statistics (it really ought to, given the extensive press and economic interest they generates)
However, despite the fact that there are conflicting reports, there are an increasing number of reports which suggest house prices in the UK are now starting to fall.
According to the Royal Institution of Chartered Surveyors House prices are falling at their fastest since mid-2005. Last month, was a bad month for house prices as higher interest rates increasingly started to bite. There was also a change in confidence and outlook caused by the problems at Northern Rock.
This survey by the Chartered surveyors comes a week after the Halifax building society reported a second consecutive month of falling house prices.
Although just to confuse the issue the Nationwide claim house prices are rising and have increased by 10% since this time last year.
Problems in measuring House Prices
A note on Monthly falls and Yearly falls
When look at house price statistics it is important to be aware of the distinction between a monthly fall and a yearly fall.
For example, the Halifax may report house prices in October fell by 0.8%. However, if we compare October 2007 with October 2006, house prices have still risen by say 8.1%.
Therefore, we can experience a temporary fall in monthly prices but still have quite a positive annual % change.
The annual % change in house prices gives a more reliable indication, because it is not subject to monthly fluctuations. But, it also hides recent changes and developments in the UK housing market.
If you want to have a newspaper headline
“House Prices Collapse” you can always find some statistic to back you up. Therefore, it becomes a bit of a mind field in actually knowing what is happening to house prices.
Geographical differences. Sometimes house prices can fall significantly but be confined to certain areas of the country like say Central London (where house prices are more volatile) again using geographical based statistics can give a biased snapshot of UK house prices
guardian article on house price
3 comments ↓
[...] Are House Prices falling?- a guide to the complexities of the housing market statistics [...]
[...] Are House prices falling? - a note on difference between monthly falls and annual house price falls. [...]
of course housing prices are falling. There are way too may people living in houses they cannot afford. I’m tired of paying off loans these people cannot afford. If you bought a home on loans and you can’t afford it, buck up and find the place you should have been in the first place. You should owe every penny on the loan you took out and find a way to repay it. Don’t ask me and your neighbors to bail you out. Take what you deserve and finally I might get what I deserve; the house you tried to own but didn’t earn.
Tired of being reasonable in the midst of unreasonable.
Tom
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