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Seasonal Adjustment Graph

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There's a link within a link in the Halifax thread which shows the graph below, but I figured it deserved a thread of its own and greater prominence.. I'm not a fan of seasonally adjusted figures for house price, they're just a fudge factor IMO. It looks like the January adjustment is anywhere between +1% and +3%

Can anyone seasonally unadjust the figures we've had in the last year based on those adjustments ?

sa.jpg

Edited by exiges

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There's a link within a link in the Halifax thread which shows the graph below, but I figured it deserved a thread of its own and greater prominence.. I'm not a fan of seasonally adjusted figures for house price, they're just a fudge factor IMO. It looks like the January adjustment is anywhere between +1% and +3%

Can anyone seasonally unadjust the figures we've had in the last year based on those adjustments ?

sa.jpg

Good work!

I though the yearly sum of the monthly adjustments should be zero – can you confirm this with your data ? (to me it looks like around -1 by estimating the figures)

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Thats amazing. January is so heavily adjusted.

Does that tell us that when we do choose to buy January is the month to get the best deal?

No.

It suggests that you might do well to agree a price in late Nov / Dec, and then apply for the mortgage, which you might expect to be approved in Jan.

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January is divorce season following being forced to spend 2 weeks with the family over the Christmas period, my friend is a solicitor and they are forming a que outside her office on Jan 4th, next stop is the estate agents.

So yes January is when you'll get the most to choose from committed sellers, but Oct/Nov is the time to grab a bargain.

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Captain Cavey - I think you're right although every year has different SA amounts - but you need to multiply the figures not sum them eg 2% is 1.02 and -2% is 0.98.

Slug - good point - yes I think that's what it's telling us but it's hard to believe that prices are expected to drop so much between December and January.

For 2007 the January adjustment was just over 3% and for February was about 1.7%. If it were the same this year then this would cause a fall of about 1.2% next month if prices remained exactly the same - and SA sould work in our favour for the next 4 months. I think that's what the graph is telling us.

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Perfect, thanks.

So in a flat market (yeah I know) you would save up to 5% at that time of year. Duly noted.

S

No, the seasonal adjustment is usually between 1 and 3% for January. It tends to be higher during boom times and lower during crashes. So probably if you are buying at the bottom of the market you stand to save around 1-1.5% if you offer in November. If you are buying at 3x gross salary that will be about 4% of a year's gross pay. It's not exactly a lot of money.

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Captain Cavey - I think you're right although every year has different SA amounts - but you need to multiply the figures not sum them eg 2% is 1.02 and -2% is 0.98.

Slug - good point - yes I think that's what it's telling us but it's hard to believe that prices are expected to drop so much between December and January.

For 2007 the January adjustment was just over 3% and for February was about 1.7%. If it were the same this year then this would cause a fall of about 1.2% next month if prices remained exactly the same - and SA sould work in our favour for the next 4 months. I think that's what the graph is telling us.

Thanks that looks about right now: Σ (monthly %) / 12 = ~100%

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If you apply the 2007 adjustments to the last year this is what you get ... assuming it is a valid thing to do!

Date reported adjustment real #"

Jan-10 0.4 3 -2.6

Feb-10 -1.6 1.8 -3.4

Mar-10 1.0 0.7 0.3

Apr-10 -0.1 -1 0.9

May-10 -0.5 -1.2 0.7

Jun-10 -0.6 -1 0.4

Jul-10 0.7 -0.8 1.5

Aug-10 0.4 -0.7 1.1

Sep-10 -3.7 -0.9 -2.8

Oct-10 1.8 -0.5 2.3

Nov-10 -0.2 0.2 -0.4

Dec-10 -1.1 0.9 -2.0

Jan-11 0.8 3 -2.2

to get a 0% in jan using to 2007 adjustment figure you would need a fall of 3%, so my view is that prices fell by 0.4 in nov, 2.0 in dec and 2.2 in jan. You may all disagree and my logic may be flawed ...

There's so much data their it's difficult to assess their methodology.

I think the question is how can their methodology be valid with such low transaction volumes

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If you apply the 2007 adjustments to the last year this is what you get ... assuming it is a valid thing to do!

Date reported adjustment real #"

Jan-10 0.4 3 -2.6

Feb-10 -1.6 1.8 -3.4

Mar-10 1.0 0.7 0.3

Apr-10 -0.1 -1 0.9

May-10 -0.5 -1.2 0.7

Jun-10 -0.6 -1 0.4

Jul-10 0.7 -0.8 1.5

Aug-10 0.4 -0.7 1.1

Sep-10 -3.7 -0.9 -2.8

Oct-10 1.8 -0.5 2.3

Nov-10 -0.2 0.2 -0.4

Dec-10 -1.1 0.9 -2.0

Jan-11 0.8 3 -2.2

to get a 0% in jan using to 2007 adjustment figure you would need a fall of 3%, so my view is that prices fell by 0.4 in nov, 2.0 in dec and 2.2 in jan. You may all disagree and my logic may be flawed ...

I think your logic is flawed! Using your figures the increase in the NSA figure from Dec10 to Jan11 would be 1.008 * 1.009 / 1.03 = 0.98745 (=-1.255%). So in the absence of the actual figures I'll make some up as an example:

Date NSA price SA price %change NSA %change SA Seasonal adjustment

Dec-10 100000 100900 0.9%

Jan-11 98745 101707 -1.255% 0.8 3%

So I reckon that using your seasonal adjustments for 2007 that prices actually fell in January but of course we need to apply the actual adjustments.

However, you have used the adjustment figure for Dec 07 instead of Dec 06 which I can't figure out from the graph.

Maybe my logic is flawed - any other suggestions please?

Does anybody know what the NSA figures were?

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No.

It suggests that you might do well to agree a price in late Nov / Dec, and then apply for the mortgage, which you might expect to be approved in Jan.

And it's a no from me too.

You won't know until the end of January whether the adjustment made the negative turn to a positive, or to make the positive look bigger. :)

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As posted on another thread, you'll find those here.

Non SA for the last two months:

Dec2010 522.7 -3.4 161,498

Jan2011 522.6 -2.4 161,470

Thanks for those. So the real figures look like this I think (* = calculated figure)

Date ...... NSA price ...... SA price ...... %change NSA ...... %change SA ...... Seasonal adjustment

Dec-10 ......161498 ...... 162870* ............ ..................................................................1.01%*

Jan-11 ...... 161470 ...... 164173 ............. -0.017% .................... 0.8 .......................... 1.67%*

So by applying a greater adjustment for Jan than for Dec it makes prices rise by 0.8% whereas in fact they fell slightly by 0.017%.

I think that's what it all means.

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