I read with interest recently the CEBR's predictions for the total fall in house prices and when it expects the turnaround to come and that got me thinking on the topic of house prices in general.
The basic problem with house prices is, whose do you use? The ones the press often pick up on are those from the Halifax and Nationwide, largely I suspect, because of their timeliness. However, the Land Registry, Department of Communities and Local Government (CLG), Hometrack and Rightmove all regularly publish estimates of house price movements and if we look at the last year for which we have data from all, to end 2008, we get end up with significantly different house price growth/decline figures:
Land Registry -13.5%
As can be seen, there is quite a spread here, due to collection methodologies, coverage and timing. Furthermore, the main providers of house price data cannot even agree on when the current decline began. Hometrack believes that house prices started falling in the third quarter of 2007, Halifax and Nationwide in the second quarter of 2008, while the CLG and Land Registry show prices dropping only from the third quarter of last year. Into the fray now wades the CEBR with the assertion that they started to decline in the summer of 2007. It's all extremely confusing.
Overall we would agree with the CEBR's assessment that house prices will not reach their trough until the first half of 2010 - Experian's latest house prices forecasts show declines to the third quarter of that year. However, in the light of no agreed basis for measuring house prices, I would be inclined to take any forecasts with a large pinch of salt.
James Hastings is head of construction futures at Experian