At the start of this year, there was widespread agreement on the direction of travel for house prices. Higher interest rates indicated that they were on the way down, and a range of experts predicted a total fall of around 10 to 15 per cent this year. Those forecasts looked correct when subsequent data for November and December published by the Office for National Statistics (ONS), Halifax and Nationwide all revealed monthly price drops. Those falls were not all of the same size, but the trajectory was clear.
Then something unexpected happened. Between January and March, Halifax recorded three straight months of house price increases while Nationwide recorded three straight months of falls. In April, the opposite happened: Nationwide data indicated an increase and Halifax suggested a dip. The ONS, meanwhile, is still recording monthly falls, but its data is more heavily lagged and only runs to the end of February so far.
What is going on? To start, Halifax and Nationwide only record mortgage approvals and only for their own customers. This means Halifax data is skewed towards wealthier buyers while Nationwide data is skewed towards the less well-off. And both ignore cash buyers completely. The ONS index is the most accurate, but it is frustratingly slow to emerge because it only records completions as recorded on the Land Registry.
Other data is available, but it doesn’t help much either. The Royal Institution of Chartered Surveyors’ most recent survey showed that estate agents’ mood is the best it's been for five months, which is notable but doesn’t tell you for sure whether prices will move up, down, or sideways. All else being equal, the Bank of England’s decision to continue increasing rates would suggest that house prices will continue to fall, but – just like everyone else – we’re waiting on the ONS to tell us for sure. The consensus was nice while it lasted.
