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othello

Why The Halifax House Price Index Is Meaningless

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The implication from today's results is that house prices are are still rising across the country. This is clearly nonsense. The reason the index shows an odd picture is that it measures only those properties that are selling. So if houses are still selling and prices rising in South Wales (for example) the index will be distored by these sales. It will not recognise that the majority of properties across the country that are on the market and not selling. The only way they will sell is when prices drop subsantially at which point they will be reflected in the index. The moral is that one should not take too much notice of these headlines stories and remember of course that they are based on reports from organisations with vested interests in talking the market up!

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The implication from today's results is that house prices are are still rising across the country. This is clearly nonsense. The reason the index shows an odd picture is that it measures only those properties that are selling. So if houses are still selling and prices rising in South Wales (for example) the index will be distored by these sales. It will not recognise that the majority of properties across the country that are on the market and not selling. The only way they will sell is when prices drop subsantially at which point they will be reflected in the index. The moral is that one should not take too much notice of these headlines stories and remember of course that they are based on reports from organisations with vested interests in talking the market up!

I was agreeing with everything you said.... up to the last sentence.

I do feel we lose a bit of credibility on this site when we insinuate that VIs blatantly fiddle the figures. At the very least this makes us look daft when they show a fall in prices.

Edited by Casual Observer

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I was agreeing with everything you said.... up to the last sentence.

I do feel we lose a bit of credibility on this site when we insinuate that VIs blatantly fiddle the figures. At the very least this makes us look daft when they show a fall in prices.

Othello, I'm not sure if I agree - why in a falling market are transactions taking place at higher prices than a year ago? While I accept your thesis that a lot of properties aren't selling and again note I am a bear, I just don't think we can write the index move off as meaningless.

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Ive got a spread open on the halifax index at the moment. Hopefully they will come round to the right way of thinking soon :lol:

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Ive got a spread open on the halifax index at the moment. Hopefully they will come round to the right way of thinking soon :lol:

Chuz, I assume you've gone short (when did you open it?) - I wonder how many people have thought about buying a house and then shorting the index to hedge themselves against a HPC?

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Othello, I'm not sure if I agree - why in a falling market are transactions taking place at higher prices than a year ago? While I accept your thesis that a lot of properties aren't selling and again note I am a bear, I just don't think we can write the index move off as meaningless.

There is a credible theory that in a weak market the best of every category sells, whilst the worst fail to sell. Therefore in, say, the category of 2 bed flats only the well appointed ones make it into the index and, even if these are going for less than a year ago, flats will still show a yoy increase.

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There is a credible theory that in a weak market the best of every category sells, whilst the worst fail to sell. Therefore in, say, the category of 2 bed flats only the well appointed ones make it into the index and, even if these are going for less than a year ago, flats will still show a yoy increase.

I'm not sure about this, according to the Halifax there was a clear uplift in Q3 this year having been a weak Q1 and Q2 - I could buy your theory if there wasn't this reversal, I think the best properties in each category should have sold by now, plus remember we've also seen data from other sources indicating mortgages are significaintly up - I think we need to be objective here about the data we're seeing - I'm thinking maybe a dead cat's bounce, but maintain i think their data is credible.

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Ive got a spread open on the halifax index at the moment. Hopefully they will come round to the right way of thinking soon :lol:

Dirty B@stard !!

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http://www.hbosplc.com/economy/includes/Re...ata07.07.05.xls

Last time around (85-93) there were fluctuations a plenty in the various data published. All they did was mask a larger trend. See the attached spreadhseet of HBOS's figures back to the 80s. Lots to choose from but to illustrate, look at the various upturns (recovery! recovery!) in the, say, 1990 Q1 and Q4 figures for a good number of regions. I think the Nationwide data show similar anomalies but with different timings due to the different bias of their clientele.

Take the figures and VI spin with a pinch of salt. Go away and come back here in January. Then all will be clear.

Edited by Tempest

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TheChuz, looked at spreadbetting on HPC myself in great detail, however when I saw it was linked to Halifax index knew it would have a massive lag to the real story. Housebuilders & Countrylied finally getting a pasting today - hopefully investors are starting to wake to reality.

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I was agreeing with everything you said.... up to the last sentence.

I do feel we lose a bit of credibility on this site when we insinuate that VIs blatantly fiddle the figures. At the very least this makes us look daft when they show a fall in prices.

I was not saying that they fiddle the figures. They publish a narrative with the figures that puts their spin on them. Last time there was a HPC the Halifax were the last to acknowledge it - just about at the point when the market was picking up again!

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  • 301 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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