The unreliability of housing price indices is highlighted with one leading provider of data in the UK showing property increasing and another showing a decline.
Within days the Nationwide said residential prices rose 0.9% in June while the Halifax statistics showed a 0.5% fall in the same period.
It highlights the danger of relying on these kinds of figures, according to experts, who also point out that different lenders record their figures in different ways.
‘The conflicting Halifax and Nationwide data highlight the fact that not too much emphasis should be placed on one particular piece of data or survey as housing data can be very volatile from month-to-month and from survey to survey,’ said Howard Archer, chief UK and European economist for IHS Global Insight.
‘It is therefore best to try to draw an overall impression from all of the data and survey evidence available. This suggests to us that house prices have recently gained some overall support from markedly increased buyer interest as well as from a lack of new properties coming on the market,’ he added.
Simon Rubinsohn, chief economist at the Royal Institute of Chartered Surveyors pointed out that if you look at the year on year price decline it is the largest gap between the two indices since January 2001 with Halifax putting it at 15% and Nationwide at 9.3%.
‘The Halifax numbers do have a tendency to be a little more volatile that the Nationwide data. Nevertheless, the continuing weakness in the former series provides a timely reminder that despite the better newsflow emerging from the housing market it is far from clear that prices have bottomed,’ he said.
Despite the differences economists agree that the figures show that the property price decline is easing in the UK and they also caution against reading too much into one set of data.
When the Nationwide released its figures a few days ago showing that prices had risen for four months in a row its economist Martin Gahbauer said the stabilisation of prices was a ‘welcome surprise’. He also said the trend was ‘more than just statistical noise’.
Halifax’s housing economist Martin Ellis reported that the 0.5% decline in June followed a 2.6% monthly rise in May and that overall prices fell 1.9% in the second quarter of the year.
‘These figures provide evidence that the underlying pace of the house price decline is easing. Improvements in affordability and low interest rates have stimulated housing demand. This, together with a low level of properties available for sale, has helped to stabilize activity and reduce the underlying rate of the house price decline in recent months,’ he said.
Ellis is predicting a mixed pattern of property price rises and falls in the rest of 2009. Rubinsohn said that a lack of mortgage finance and further job losses are still major factors preventing a property recovery in the coming months.