FT Conflicting House Price Reporting
House Price Growth Slows says FT (4th Feb) vs House Prices Rise Sharply in January says FT (29th Jan) just 6 days earlier.
How did the FT do it? On the 4th of Feb they told us that ‘house prices rose at their slowest pace in six months in January according to a closely watched index (Halifax)… adding to signs that the rapid pace of recovery may be slowing’
Yet only a week before on 29th Jan the FT told us ‘UK house prices posted strong gains in January according to a closely watched index‘ (Nationwide).
So what is going on?
Well, one closely watched index samples from late December to late January and reported in January – that said house prices were going up.
The other closely watched index, reporting in early Feb, measured price changes in January only – not December – and that told us the price rises were slowing down and the prospects looked weak.
The trouble is that the FT didn’t clearly distinguish one index from another and told us that both indices are ‘closely watched’.
This reporting might be acceptable on a cheap newspaper, but its appearance on a quality financial paper suggests either that the we’ve all grown rather bored of property prices indices and just reprint the press releases or the press releases are able to baffle the bright journalists at top business newspapers.
The interesting story, of course, is not the latest report on house prices, but the volatility of the different indices. Typically, when the market is moving in the same direction, the indices are either both positive or both negative.
What is new is that we have a marketin which the indices are going in different directions.
This index conflict could be down to either
a) each index measures a similar sample of the market (or it is able to statistically adjust the figures to ensure it is not biased) in which case, the difference must be a result of the positive growth index taking an earlier sample and the negative index taking a later sample.,
If this is the case, then we must conclude the UK property market has turned negative in early Jan.
or
b) the positive index is measuring the sector of the UK property market that is making sales and achieving better sales than last year whilst the negative index shows that there are other parts of the market that are falling.
Or possible, a combination of the two.
Who knows, but it is instructive nevertheless to know that what we hear about property is simply regurgitated without any critical analysis or thinking.
And that property price indices are most interesting when the disagree.
Next month, we shall watch carefully to see if either index has switch from positive to negative (or vice versa) or if they continue to disagree…. from which we should be able to conclude that either the market has turned or that each index samples a different sector of the market.