Posts Tagged ‘price’
UK house price indices labelled a ‘farce’
Ray Boulger of mortgage broker John Charcol said the Nationwide and Halifax reports distort the market by being seasonally adjusted. ?Photo: AP
Ray Boulger of mortgage broker John Charcol said the Nationwide and Halifax reports distort the market through the “nonsense” of being seasonally adjusted.
“The way providers of house price indices seasonally adjust their figures is a farce (or, seasonally adjusted, a comedy),” said Mr Boulger. “In many months the seasonal adjustment skews the real figures so much the result is that the comment generated is often misleading.”
As an example Mr Boulger said the underlying figures from the indices show a small rise over the first five months of the year, 0.5pc for Halifax and 3.1pc for Nationwide, but then he points out the picture given by the seasonally adjusted figures can be far more gloomy.
Both mortgage providers use seasonally adjusted figures to smooth the variations in their figures and to account for the natural variations in prices driven by changes in buying patterns during the year. Both figures are based on mortgage valuations, rather than underlying selling prices.
“To help restore confidence in all UK house price statistics, not just those from Nationwide and Halifax, I suggest all providers should give at least as much prominence to the real figures as they do to the seasonally adjusted ones,” added Mr Boulger.
House prices are a particularly sensitive subject for those involved in the housing market as falling prices tend to stifle activity. The Government is currently undertaking a review of the subject. According to Mr Boulger one of the key recommendations should be that “real” figures should be published alongside seasonally adjusted ones.
He said: “Whilst it is true that activity in the housing market tends to be seasonal, this doesn’t automatically mean that prices are impacted by the seasons.”
A spokesman for Nationwide said: “We think prices are seasonal. To look at individual months would not give the full picture.”
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UK house price indices labelled a misleading ‘farce’
Ray Boulger of mortgage broker John Charcol said the Nationwide and Halifax reports distort the market by being seasonally adjusted. ?Photo: AP
Ray Boulger of mortgage broker John Charcol said the Nationwide and Halifax reports distort the market through the “nonsense” of being seasonally adjusted.
“The way providers of house price indices seasonally adjust their figures is a farce (or, seasonally adjusted, a comedy),” said Mr Boulger. “In many months the seasonal adjustment skews the real figures so much the result is that the comment generated is often misleading.”
As an example Mr Boulger said the underlying figures from the indices show a small rise over the first five months of the year, 0.5pc for Halifax and 3.1pc for Nationwide, but then he points out the picture given by the seasonally adjusted figures can be far more gloomy.
Both mortgage providers use seasonally adjusted figures to smooth the variations in their figures and to account for the natural variations in prices driven by changes in buying patterns during the year. Both figures are based on mortgage valuations, rather than underlying selling prices.
“To help restore confidence in all UK house price statistics, not just those from Nationwide and Halifax, I suggest all providers should give at least as much prominence to the real figures as they do to the seasonally adjusted ones,” added Mr Boulger.
House prices are a particularly sensitive subject for those involved in the housing market as falling prices tend to stifle activity. The Government is currently undertaking a review of the subject. According to Mr Boulger one of the key recommendations should be that “real” figures should be published alongside seasonally adjusted ones.
He said: “Whilst it is true that activity in the housing market tends to be seasonal, this doesn’t automatically mean that prices are impacted by the seasons.”
A spokesman for Nationwide said: “We think prices are seasonal. To look at individual months would not give the full picture.”
Visit Telegraph Mortgage Services for free mortgage advice