House prices aren’t falling any time soon

The thing about having three prominent house prices indices, all of which publish monthly figures, is that they are forever telling conflicting stories. Indeed, today’s Nationwide index, itself, nods in two different directions: prices were down 0.2 per cent in March, but the annual gain in prices was up from 1.2 per cent in February to 1.6 per cent in March. So is the housing market up or down?

The first thing to note is that the Nationwide index is seasonally-adjusted – a process which is always at risk of giving a perverse outcome because it assumes that the same pattern of housing market activity will be repeated every year. Prices could well go up, but if that rise is less than in previous years, then in a seasonally-adjusted index it could register as a fall. Moreover, the Nationwide and Halifax indices – which are derived from limited amounts of data from the lenders’ own mortgage approvals – were never designed to be read month on month.