Not for the first time, a gulf has opened up between house price indices. This morning, Nationwide reports that average prices fell by 0.1 per cent in May (following a surprise rise of 0.4 per cent in April), taking annual house price inflation down to minus 3.4 per cent. That will surprise no-one, given the rise in interest rates over the past year. Except, that is, for the fact that the Office for National Statistics (ONS) reported last week that average prices are up by 4.1 per cent over the year.
On the one hand we appear to be entering a slide, which could easily turn into a crash. On the other, the market ploughs on ahead, shrugging off the negative influence of rising interest rates and making people wonder whether the UK housing market will ever fall.
It would not be surprising if recent optimism among people who like high house prices turns out to be a brief affair
The two indices surely can’t both be right, so what is going on? There are important differences between the two indices.
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