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NEO72

Nationwide Hpi

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OK, so I've been getting increasingly suspicious of Nationwide's claims that their index doesn't have a southern bias (see here) as this year, the Nationwide index seems to be moving away from the Halifax and LR indices, with the NW looking flat, or slightly up and the other two trending down.

from their website:

Are your house prices biased because you do more lending in the South East?

No. The whole point of mix adjusting prices is to remove any bias that the Nationwide mortgage data may exhibit whether that be the type of property we lent on or its location or indeed any one of the other characteristics we use to identify our representative house

So I thought I'd chart the Halifax, Nationwide and Land Reg (both England & Wales and London) indices together to see if there were any obvious patterns and low and behold, it seems that the LR for London correlates nicely with the Nationwide data, whilst there also appears to be a strong correlation between the Halifax and LR (England & Wales) data.

Now it seems that this divergence has only begun since early this year (previously, there was a strong relationship between the three indices), which coincides with the London area showing some resilience (whilst most other areas have fallen to a greater or lesser degree). So my theory is that prior to the end of last year, this Nationwide bias was disguised, as London rose and fell pretty much in line with England and Wales as a whole. However, as London and 'elsewhere' prices have begun to diverge this year, this bias has become evident. So I would argue that Halifax figures are far more representative of England and Wales as a whole, whilst Nationwide is more representative of London prices i.e. the southern bias that they claim to have removed.

Anyone got any thoughts? Anything I've overlooked?

Nationwide HPI.jpg

post-20860-0-11523600-1309556132_thumb.jpg

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Anyone got any thoughts? Anything I've overlooked?

Could be so - starting to look that way by eye. Rather than simply stacking graphs, what happens if you calculate correlations between them, or even plot them against one another on an XY chart and show which are straight line matches and which deviate?

The Excel function to calculate correlations is =CORREL(array1,array2)

[edited for grammar]

Edited by BlinkTooFast

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Thanks BTF I've not come across that function before. I'll probably stick the data in spss at work when I next get chance, will wait for the next Halifax figure to include too.

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Interesting you should do this as I thinking the exact same thing this week about comparing London land registry with nationwide.

I think that nationwide are probably keeping the lending tight and only lending to people who are complete safe bets and they see London as a better bet than the rest of the country patriculary the north. So if your from with a large deposit nationwide want to lend to you. If your from the north with a 10% deposit then computer says no.

Well done for doing the charts. It would be interesting to keep updating them.

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Was looking at this last week. Historically it seems Nationwide's spring bounces are bouncier than most.

It could be that NWs seasonal adjustment is also a bit suspect if that's the case. One thing that struck me with the charts here is how relatively erratic the NW line was, which I expect reflects their relatively small sample size (they have less than 8% share of the mortgage market) - it's noticable how the LR (London) data is smoother, than the NW, which covers all England and Wales.

Interesting you should do this as I thinking the exact same thing this week about comparing London land registry with nationwide.

I think that nationwide are probably keeping the lending tight and only lending to people who are complete safe bets and they see London as a better bet than the rest of the country patriculary the north. So if your from with a large deposit nationwide want to lend to you. If your from the north with a 10% deposit then computer says no.

Well done for doing the charts. It would be interesting to keep updating them.

Thanks PU, yes will be interesting to see if it continues although if/when London prices fall into line then this anomaly will be disguised again.

I think the problem is that people just think 'mix-adjusted - must be OK then' whilst not taking into account the fact that in the mix-adjustment/weighting process there are many arbitary and subjective assumptions made.

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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