Friday, March 12, 2010
A different take on house prices
Posted by David Smith at 10:00 AM
Category: Thoughts and responses

After reported falls in house prices in February from both the Nationwide and Halifax, the latest news from Acadametrics, which used to produce the FT's house price index, gave a rather different picture. It showed that prices rose by a hefty 1.9% in February, for an increase of 9.7% on a year earlier. The average house price in England and Wales was 222,008. I like the Acadametrics house price index for its completeness and rigour, but why the big difference? Dr Peter Williams, Acadametrics chairman, explains:

"Given that the two lender mortgage approval based indices for February showed falls of -1.0% and -1.5%, we have a clear tension as to what is really happening in the market. The AcadHPI for the latest month is forecast on a mix of data but, as prior months show, when more data becomes available is impressively stable and reliable. In seeking answers to the current divergence we would stress AcadHPI is a completion based measure, it covers England and Wales rather than the UK and it includes all properties sold including cash purchases and homes sold for over 1 million. All of these will be factors in explaining the difference."

The index is here.