thecrashingisles Posted June 9, 2011 Share Posted June 9, 2011 http://www.telegraph.co.uk/finance/economics/houseprices/8564655/UK-house-price-indices-labelled-a-farce.html Ray Boulger of mortgage broker John Charcol said the Nationwide and Halifax reports distort the market through the "nonsense" of being seasonally adjusted."The way providers of house price indices seasonally adjust their figures is a farce (or, seasonally adjusted, a comedy)," said Mr Boulger. "In many months the seasonal adjustment skews the real figures so much the result is that the comment generated is often misleading." As an example Mr Boulger said the underlying figures from the indices show a small rise over the first five months of the year, 0.5pc for Halifax and 3.1pc for Nationwide, but then he points out the picture given by the seasonally adjusted figures can be far more gloomy. Both mortgage providers use seasonally adjusted figures to smooth the variations in their figures and to account for the natural variations in prices driven by changes in buying patterns during the year. Both figures are based on mortgage valuations, rather than underlying selling prices. "To help restore confidence in all UK house price statistics, not just those from Nationwide and Halifax, I suggest all providers should give at least as much prominence to the real figures as they do to the seasonally adjusted ones," added Mr Boulger. Quote Link to comment Share on other sites More sharing options...
Bruce Banner Posted June 9, 2011 Share Posted June 9, 2011 Not about to go bust again are they? Quote Link to comment Share on other sites More sharing options...
Normal Posted June 9, 2011 Share Posted June 9, 2011 As an example Mr Boulger said the underlying figures from the indices show a small rise over the first five months of the year, 0.5pc for Halifax and 3.1pc for Nationwide, but then he points out the picture given by the seasonally adjusted figures can be far more gloomy. So as we head towards the time of year when the seasonal adjustment is positive, he wants the real figures quoted? Not seeing a problem here! Quote Link to comment Share on other sites More sharing options...
Georgia O'Keeffe Posted June 9, 2011 Share Posted June 9, 2011 http://www.telegraph.co.uk/finance/economics/houseprices/8564655/UK-house-price-indices-labelled-a-farce.html He has a point it is misleading I would propose using seasonally adjusted figures when they are positive and Non adjusted when they are positve and when both are negative the number should be multiplied by -1 before reporting Quote Link to comment Share on other sites More sharing options...
InlikeFlynn Posted June 9, 2011 Share Posted June 9, 2011 I'm not sure of the usefullness of the Nationwide and Halifax figures really, adjusted or otherwise as they only cover a small segment of the market. Anyone know when the land registry figures are released? Flynn Quote Link to comment Share on other sites More sharing options...
swissy_fit Posted June 9, 2011 Share Posted June 9, 2011 I'm not sure of the usefullness of the Nationwide and Halifax figures really, adjusted or otherwise as they only cover a small segment of the market. Anyone know when the land registry figures are released? Flynn Not much better, they're fixed as well. Lots of repos and auction properties don't get declared on there based on some arbitrary criteria of something being sold "below market value", whatever that means. ALL sales should be on the Land Registry, whatever the price. Quote Link to comment Share on other sites More sharing options...
Mrs Bear Posted June 9, 2011 Share Posted June 9, 2011 http://www.telegraph.co.uk/finance/economics/houseprices/8564655/UK-house-price-indices-labelled-a-farce.html What does 'seasonally adjusted' mean, anyway? What do they actually do to the figures in a particular month/season? Does anyone know? Raw sold prices are the only real indicator - why do they have to bugger about with figures at all? Quote Link to comment Share on other sites More sharing options...
Riedquat Posted June 9, 2011 Share Posted June 9, 2011 So as we head towards the time of year when the seasonal adjustment is positive, he wants the real figures quoted? Not seeing a problem here! I thought they were adjusted down at this time of year. More active market in the spring, unadjusted figures go up slightly, move them down to compensate, and the opposite in winter - fewer sales, lower prices, move up to compensate. Quote Link to comment Share on other sites More sharing options...
Pent Up Posted June 9, 2011 Share Posted June 9, 2011 Not about to go bust again are they? Quote Link to comment Share on other sites More sharing options...
bobthe~ Posted June 9, 2011 Share Posted June 9, 2011 Why is he going on about this now? Never bothered when prices were rising? I believe he brought it up at this time last year as well. Funnily enough, as has already been observed, this wasn't a drum he was banging in the winter months. Quote Link to comment Share on other sites More sharing options...
Driver Posted June 9, 2011 Share Posted June 9, 2011 <snip> and auction properties don't get declared on there <snip> And there is that urban myth yet again. Auctions are included in the Land Registry figures as long as they are not repossessions nor fall under any of the other excluded criteria. Quote Link to comment Share on other sites More sharing options...
LiveAndLetBuy Posted June 9, 2011 Share Posted June 9, 2011 I remember Boulger saying exactly the same a couple of years ago when seasonally adjusted figures were lower than the raw data. Then the seasonally adjusted figures went higher than the raw data (as they have to) and he shut up. Doesn't he get that the seasonal figures have to even out over the year? Quote Link to comment Share on other sites More sharing options...
Tired of Waiting Posted June 9, 2011 Share Posted June 9, 2011 Not much better, they're fixed as well. Lots of repos and auction properties don't get declared on there based on some arbitrary criteria of something being sold "below market value", whatever that means. ALL sales should be on the Land Registry, whatever the price. Definitely. By the way, this is a serious problem, and will be even more distorting when repossessions increase in the next couple of years. We should try to think ways to publicise more this problem, somehow (media?), and put some pressure on them to stop this ridiculous and totally indefensible distortion. It should even be illegal! Quote Link to comment Share on other sites More sharing options...
RufflesTheGuineaPig Posted June 9, 2011 Share Posted June 9, 2011 Auctions are included in the Land Registry figures as long as they are not repossessions nor fall under any of the other excluded criteria. Such as being sold for less than they sold for last year. Quote Link to comment Share on other sites More sharing options...
AteMoose Posted June 9, 2011 Share Posted June 9, 2011 (edited) And there is that urban myth yet again. Auctions are included in the Land Registry figures as long as they are not repossessions nor fall under any of the other excluded criteria. http://www1.landregi...tion/exclusions exclusions, does commercial transactions include selling to a BTL company/investor who has wrapped things up in a company? If so a bigger chunk of auctions will be excluded Edited June 9, 2011 by AteMoose Quote Link to comment Share on other sites More sharing options...
davidcameron Posted June 9, 2011 Share Posted June 9, 2011 What does 'seasonally adjusted' mean, anyway? What do they actually do to the figures in a particular month/season? Does anyone know? Raw sold prices are the only real indicator - why do they have to bugger about with figures at all? They apply a statistical smoothing algorithm to the monthly figures. It obviously has no effect on the annual figures as the same statistical adjustment would be applied to the same month in the previous year, but it does change the M/M or Q/Q numbers. It makes sense to do this to a series that has marked seasonal variations although I question the value to HP statistics in the present climate to be honest. Retail sales at Christmas are the obvious example for seasonal adjustment. A headline that "retail sales in December rose 25% over November" tells you nothing useful. It's not infallible though, as Easter's variation in March and April plays havoc with the numbers in many series. Quote Link to comment Share on other sites More sharing options...
The Knimbies who say No Posted June 9, 2011 Share Posted June 9, 2011 They apply a statistical smoothing algorithm to the monthly figures. It obviously has no effect on the annual figures as the same statistical adjustment would be applied to the same month in the previous year, but it does change the M/M or Q/Q numbers. It makes sense to do this to a series that has marked seasonal variations although I question the value to HP statistics in the present climate to be honest. Retail sales at Christmas are the obvious example for seasonal adjustment. A headline that "retail sales in December rose 25% over November" tells you nothing useful. It's not infallible though, as Easter's variation in March and April plays havoc with the numbers in many series. Are you sure about that? I don't think that's necessarily the case for both indices. ie only year-on-year figs for Jan-Dec are comparable. Quote Link to comment Share on other sites More sharing options...
RichB Posted June 9, 2011 Share Posted June 9, 2011 http://www.telegraph...ed-a-farce.html Both mortgage providers use seasonally adjusted figures to smooth the variations in their figures and to account for the natural variations in prices driven by changes in buying patterns during the year. Both figures are based on mortgage valuations, rather than underlying selling prices. Ah, so all the cash buyers about are completely by passed on this then? I thought people kept telling me it was cash buyers keeping it all afloat..? Quote Link to comment Share on other sites More sharing options...
eric pebble Posted June 9, 2011 Share Posted June 9, 2011 Not about to go bust again are they? Never mind Fatty Boulger Oh! You could sell us some more LIAR LOANS! Quote Link to comment Share on other sites More sharing options...
Warwick-Watcher Posted June 9, 2011 Share Posted June 9, 2011 Not much better, they're fixed as well. Lots of repos and auction properties don't get declared on there based on some arbitrary criteria of something being sold "below market value", whatever that means. ALL sales should be on the Land Registry, whatever the price. I'm starting to think that Nationwide is probably the best representation of the UK as a whole. Exclude London due to the rich foreigners paying in cash. Ignore Halifax as they are northern biased (poorer). Nationwide represents the majority position - i.e. need to borrow money via a mortgage to buy a property. Quote Link to comment Share on other sites More sharing options...
The Knimbies who say No Posted June 9, 2011 Share Posted June 9, 2011 Ah, so all the cash buyers about are completely by passed on this then? I thought people kept telling me it was cash buyers keeping it all afloat..? Cash buyers are bypassed on indices used by providers of mortgage finance, yes. Quote Link to comment Share on other sites More sharing options...
davidcameron Posted June 9, 2011 Share Posted June 9, 2011 Are you sure about that? I don't think that's necessarily the case for both indices. ie only year-on-year figs for Jan-Dec are comparable. Both the SA and not SA series show a fall of 4.1% for the year to May (as they should). Seasonal adjustment must sum to zero over the time period. Quote Link to comment Share on other sites More sharing options...
South Lorne Posted June 9, 2011 Share Posted June 9, 2011 http://www.telegraph.co.uk/finance/economics/houseprices/8564655/UK-house-price-indices-labelled-a-farce.html ..Boulger is a broker in smoke and mirrors....he should be ignored.... Quote Link to comment Share on other sites More sharing options...
slogger Posted June 9, 2011 Share Posted June 9, 2011 ..Boulger is a broker in smoke and mirrors....he should be ignored.... they can probably hide small fluctuations in adjustments (i.e. 1-2% over a year) - but they're not going to hide 20-30% + drops! Quote Link to comment Share on other sites More sharing options...
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