Explaining the differences

Jeremy Warner of the Independent had an interesting take on the differences between the Halifax and Nationwide house price indices.....

The apparent green shoots of an uptick in house prices reported by the Nationwide Building Society earlier this week were trampled underfoot yesterday by Halifax's rival index, which showed the exact opposite – namely that prices continued to fall last month. The juxtaposition of the two indices reverses that of a month ago, when it was the Halifax saying that prices were recovering and Nationwide that they were still on a downward trajectory.

The dichotomy is easily explained. The housing market is so illiquid right now that a relatively small number of transactions can easily distort the monthly figures one way or the other.