What’s stopping a housing crash?

Should we really believe that house prices rose by 0.9 per cent in September, as claimed by the latest release from the Nationwide House Price Index? The unexpected rise moderates the annual fall in house prices from 5.3 per cent in August to 3.3 per cent in September. There is a health warning on the Nationwide’s figures – and one which also applies to the monthly Halifax figures. Both these indices are derived from data on mortgage approvals for their own customers. When the market slows and there are fewer sales, it means there is less data on which to base the monthly figures, which inevitably makes them less reliable. Indices such as these were only originally meant to be read on a quarterly basis. For a fuller picture, we should be looking at the Office of National Statistics house price index, which is based on every property sale across the United Kingdom – although because it is based on completed sales rather than mortgage approvals it is always lagging by a couple of months.