The Nationwide House Price Index - are house prices rising or falling? Why it’s important to look beyond the headline…

Posted on 28 April 2017 by Ray Boulger

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Nationwide Building Society’s press announcement, issued with their April House Price Index states that: “House prices show second consecutive monthly decline in April.” Much of the media comment that followed reflected this news, including the BBC’s who have run with the headline that: “House prices fell again in April, Nationwide says.” Of course by sourcing the Nationwide the journalist is factually correct - but as consumers, it’s important that we all look beyond the headline at the facts.

 Figures from the Nationwide report highlight that house prices have risen in each of the last two months - their table of monthly average prices for the past 12 months is below:

April 2016


May 2016


June 2016


July 2016


August 2016


September 2016


October 2016


November 2016


December 2016


January 2017


February 2017


March 2017


April 2017


These figures show that in reality house prices rose in each of the last 2 months, by 0.7% in March and by 0.2% in April.

So why has the Nationwide stated said that prices have declined?

The reason for this is that Nationwide, in line with the Halifax and its monthly house price reports, perform a seasonal adjustment, based on a complicated formula which also has the effect of retrospectively changing the index figure. In today’s fast moving world hardly anyone is interested in, or will even notice, an index adjustment made now to a figure published well over a year ago! When the ONS made major changes last year to the official house price index it very wisely, after wide consultation, decided to focus on the real figures in its monthly report, but continue to publish the seasonally adjusted figures for those who wanted them.

So why does this matter?

The media plays an important role in shaping consumer sentiment of what’s happening in the industry. Using artificial figures won’t necessarily reflect what’s happening on the ground and in many people’s lives. 

As an industry we have an obligation to recognise  that many factors have much more influence on house prices than the seasons – such as the availability and cost of mortgage finance. Very often the private sector is much quicker to respond than the Government when changes are needed but in the calculation of house prices the ONS is leading the way. The gauntlet has been thrown down – so let’s see who the first to catch up is!

Categories: House and home, Moving Home, Property market


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