Sunday, April 13, 2008
Davis Smith has a go at us
Since the credit crisis broke there has been a respectable position, now taken by most economists, that this would be the trigger for a significant house-price correction. I certainly considered that in August-September. We should distinguish that, of course, from the obsessives you can find in the internet’s darker corners, who have been wrongly predicting an imminent crash for years. But, without shooting the messenger, it seems to me that Halifax’s figure gave us an object lesson in how not to interpret statistics. When a number is so far away from the norm, we should treat it as odd. The statistics may have been distorted by home information packs (Hips), smaller samples than usual, or by the lenders’ own valuation policies.