In Thursday’s house price post:
…in March, for the first time since October 2007 , according to the latest survey from the Nationwide.
But is this just a dead cat bounce or something more significant?
Nationwide is hedging its bets.
The moderation in the annual rate of fall is somewhat distorted by conditions last year and so it would be unwise to draw strong conclusions from the significant slowdown in the annual rate of fall. Equally, while the rise in prices in March is welcome, it is far too soon to see this as evidence that the trough of the market has been reached. The Bank of England has already taken strong measures to ease the tensions in economic and financial markets by cutting rates and commencing quantitative easing. However it will take time for these to work through into the housing market before we can expect a sustained recovery in house prices.
And Howard Archer at IHS Global Insight reckons it is important not to read too much into March’s gain.
As Nationwide point out themselves. House prices can be very volatile on a month-to-month basis, and the Nationwide data still show that house prices fell by 4.2% quarter-on-quarter in the first quarter of 2009, which was only modestly down from the 4.7% quarter-on-quarter drop seen in the fourth quarter of 2008
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Errr scratch that.
Halifax on Friday said house prices fell 1.9 per cent in March:
Meanwhile, the house price to earnings ratio — a key measure of housing affordability — was at its lowest level since early 2003 at 4.34.
And here’s the historical data from Halifax:
How do economists rationalise the – err, obvious discrepancy? Here’s Howard Archer from IHS Global Insight on the matter:The Halifax data is in very marked contrast to the Nationwide reporting that house prices rose 0.9% month-on-month in March. This was the first monthly increase on the Nationwide measure since October 2007, and followed a drop of 1.9% month-on-month in February. Consequently, the year-on-year decline in house prices moderated to 15.7% in March from 17.6% in February on the Nationwide measure.
The contrasting data for March provided by the Halifax and the Nationwide highlight the fact that house price data can be very volatile from month to month, and also between surveys. Earlier this year, the Halifax had reported a 2.0% month-on-month drop in house prices in January, while the Nationwide had reported a 1.2% rise. This means that it is very important not to attach too much importance to one particular survey or data point, but to take an overall view from all of the pieces of information that are available.
So who is right? We guess that means only you can decide.
Related links:
Rejoice! – UK house prices rise – FT Alphaville
UK house prices rise (surely some mistake, eh?) - FT Alphaville