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Nationwide's Real House Price Index ends year with a 0.4% fall

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December is usually the month when Nationwide’s widely reported seasonally adjusted House Price Index shows the largest upward adjustment from the real figure and this year was no different.

Thus a real fall of 0.4% in December is translated into a seasonally adjusted rise of 0.4%. This is the first real monthly fall since the market bottomed out in February and leaves the index 5.9% up on the year. Over any 12 month period the Real and Seasonally Adjusted figures must agree and so 5.9% is the annual rise on both bases.

The Real index ends the year 12.9% down from its October 2007 peak but 9.7% up from its February 2009 floor. Virtually all of the bounce took place in the seven months between March and September, with the index increasing by only 0.2% in the last three months of the year.

The seasonally adjusted figure for the first month of next year will be adjusted upwards from the real figure and so with no signs yet of any significant weakness in the market Nationwide may well report another small seasonally adjusted rise in January, even if the real figure shows another small fall.

Nationwide has also released its quarterly regional survey and, as usual, this shows some substantial variations throughout the UK. It is important to note that compared to the national figures there are some significant differences in the way the regional and sub regional figures are calculated. In particular the regional figures are based on average prices in the last quarter rather than the figure for the last month.

Although the increase in prices in the last quarter of 2009 was small there were large falls in October and December 2008 and although these falls will of course have fallen out of the national year on year comparison they are still partly reflected in the regional figures.

Hence the annual percentage change in the regional index is only +3.4%, a significant 2.5% less than the figure in the national index, and this must be remembered if one tries to compare the regional and sub regional indices with the national one. In broad terms it means that the benchmark to assess whether a region has outperformed or underperformed is 3.4%, not 5.9%.

The strongest regional performance was, not surprisingly, Greater London, with a rise of 7%, followed closely by the Outer Metropolitan region at 6.4% and then the Outer South East at 5.5%. The worst performing region, and by a substantial margin, was Northern Ireland, with a fall of 6.7%, followed by the North of England with a 2% fall. It should be noted that the North excludes Yorkshire & Humberside and the North West. It actually covers just County Durham, Cumbria, Northumberland, Teeside and Tyne & Wear.

The best performing sub regions were Tower Hamlets with +14%, followed closely by Camden at +13%, whereas the worst performing sub regions were Northern Ireland (West) with -14%, and then Barking and Dagenham at –12%. Tower Hamlets includes Canary Wharf and much of Docklands and so it would not be surprising to see it underperform next year as the issue with bankers’ bonuses occurred too late this year to have impacted the figures.

What is surprising is the substantial underperformance of Barking & Dagenham. This remains the cheapest borough in London and hence the one that should have benefitted most from the temporary increase (until today) in the Stamp Duty threshold to £175,000.

The following table shows the recent trends:

The Nationwide House Price Index – The Real Figures and the Seasonally Adjusted Ones
MonthAverage price (£)Real ChangeSeasonally Adjusted ChangeDifference
2008Jan180,473- 0.9%- 0.6%+ 0.3%
 Feb179,358- 0.6%,- 0.9%- 0.3%
 Mar179,110- 0.1%- 1.2%- 1.1%
 Apr178,555- 0.3%- 1.2%- 0.9%
 May173,583- 2.8%- 3.0%- 0.2%
 Jun172,415- 0.7%- 1.3%- 0.6%
 Jul169,316- 1.8%- 2.0%- 0.2%
 Aug164,654- 2.8%- 2.0%+ 0.8%
 Sept161,797- 1.7%- 1.8%- 0.1%
 Oct158,872- 1.8%- 1.5%+ 0.3%
 Nov158,442- 0.3%- 0.2%+ 0.1%
 Dec153,048- 3.4%- 2.6%+ 0.8%
2009Jan150,501- 1.7%- 1.0%+ 0.7%
 Feb147,746- 1.8%- 1.7%+ 0.1%
 Mar150,946+ 2.2%+ 1.2%- 1.0%
 Apr151,861+ 0.6% - 0.2%- 0.8%
 May154,016+ 1.4%+ 1.4%Nil
 Jun156,442+ 1.6%+ 1.0%- 0.6%
 Jul158,871+ 1.6%+ 1.4%- 0.2%
 Aug160,224+ 0.9%+ 1.4%+ 0.5%
 Sept161,816+ 1.0%+ 0.9% - 0.1%
 Oct162,038+ 0.1%+ 0.5%+ 0.4%
 Nov162,764+ 0.4%+ 0.5%+ 0.1%
 Dec162,103- 0.4%+ 0.4%+ 0.8%
Price Changes
OverReal ChangesSeasonally adjusted changes
2009+ 5.9%
The last 6 months+ 3.6%+ 5.3%
The last 3 months+ 0.2%+ 1.5%
The last month- 0.4%+ 0.4%
Fall from peak- 12.9%- 12.2%
Increase from 2009 trough+ 9.7%+ 8.9%
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Readers' comments (2)

  • I'm no statistician, but Nationwide's seasonal adjustments are significantly more positive in the first half of 2009 than the previous year (fig in brackets): Jan 09 +0.7 (+0.3), Feb 09 +0.1 (-0.3), March 09 -1.0 (-1.1), April 09 -0.8 (-0.9), May 09 NIL (-0.2). So what was going on? Should I be joining the conspiracy theorists?

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  • the transaction figures a too small to get a real view of the market..because where i live the market is on life support

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