The Nationwide's 'Chief Economist' Fionnuala Early has kept us all entertained over the past year with her Time Travel Adventures, whereby each month's house price statistics contained the pat phrase "But house prices are still £x higher than they were y years ago", whereby x was an ever decreasing figure and/or y an ever larger one.
The Nationwide's January figures show that either the time machine has broken down or Fionnuala has simply disappeared into the ether...
Commenting on the figures Martin Gahbauer, Nationwide's Senior Economist, said "The price of a typical house fell by a further 1.3% in January, as the deepening economic recession and financial market turbulence continued to weigh on housing market sentiment and activity. January’s decline leaves the average price of a typical house at £150,501, down 16.6% from 12 months ago. The 3-month on 3-month rate of change, a smoother indicator of the short-term trend in prices, improved for the fourth consecutive month from -4.2% in December to -4.0% in January. However, it is too early to say that this marks the start of a sustained improvement in the short term trend."
Or possibly that it's just too embarassing to admit that the average price - currently given as £150,501 - will be lower than the price of five years earlier (£145,918 in April 2004) by April 2009, assuming that the next three months see prices fall by a further 4%?
Thursday, 29 January 2009
Fionnuala: lost in time and space?
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7 comments:
Yep - FE's name was not on the report for the first time in at least 3 years and she did not do the interview on Bloomberg or SKy.
I miss her already
Where does a "Chief Economist" go after being fired? Is there a pasture farm for them (perhaps the EU?)
Even these average house price igures are likely to be be on the high side:
1. They don't include repossessions which are treated as a commercial transactions.
2. The reduction in the number of transactions is making it harder to mark to market and adding volitality to the numbers.
3. An everage based on the whole country is totally misleading.
4. Its in their interest to extract the best statistics see 1,2 & 3.
I tend to agree with the Great Simpleton. Unless you know the volume as well as the price, these numbers may be worthless. Some people have to move and will thus be forced to pay over the odds. Others will hold off thinking the price is due to decline further. If the volume has declined by a large proportion, say 90% (although it wouldn't need to be so high), it is self evident that the price is still too high.
TGS, I don't think that the figures are deliberately skewed (unlike NW's price forecasts of a year ago!), plus they are only averages of averages etc.
Anon, agreed, prices would have to fall considerably to get us back to the normal turnover of one to two million homes per year.
They're bonkers.
Long term multiple of NAE to NAHP = approx 3.5 times.
NAE currently about 24,000
NAHP currently about 150,000
Current multiple = approx 6.25 times.
Ipso fatso house prices have to fall by another 50% ish OR inflation has to go nuclear and NAE driven up by much smaller pounds meeting house prices on the way down and neatly robbing savers and writing down government debt to us.
No prizes for which route attracts the Great Snot Gobbler.
L, they managed to inflate away the real wage-adjusted losses after the 1973 house price crash, and they managed to inflate away half the real losses after the 1989 house price crash (and you can probably remember how high inflation was then), but ...
a) Just look at the size of the 2007 peak, chart here.
b) We are now in a spiralling deflationary environment. Every penny that people get they will use to pay off debts or to 'save' in case things get worse. Not one penny is going to go into buying new houses.
c) To get a really high inflation rate, you need to be able to physically print money (Weimar, Zim) and you also need exchange controls (which the UK still had in the 1970s). Printing electronic money like Japan in the 1990s and 2000s without exchange controls just sees the money flow abroad and reduces your exchange rate temporarily - until it all rushes back and you are back to square one.
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