Halifax and Nationwide both reported the movements of house price last week.  The data resulted in contradiction that has caused some confusion, leading to more predictions within the property market.

Is the property market starting to recover, or is the worst still yet to come?

Following the abrogation of the yearly property forecast due to the volatility of the market in December, 2008; the two leading mortgage lenders, Halifax and Nationwide, provided data reports of the movements of house price in March last week. Halifax released its data showing a drop of 1.9% in house prices; whilst Nationwide surprisingly reported a first rise of 0.9% since October, 2007.

We are certainly striving under a gloomy economy illustrated by the data of increase redundancy, low interest rate and profit loss. Nationwide suggesting an increase in house price at this moment visibly challenges the current economy. This challenging contradiction clearly causes confusion for home-owners – who would invest according to the “trend”.

The rise and fall of house prices in the same month explicitly revealed the instability and unpredictability of the current housing market. Even though most of the financial commentators agreed that the sharpest drop in house prices seem to have passed, the public are being warned not to build hopes too high too soon on the subject of the increase in house price. Nationwide further declared that it is far too soon to see the increase in house price as evidence that the trough of the market has been reached (Times Online, 2nd April, 2009).

Besides, the discrepancy in the movement of house price by Halifax and Nationwide triggered further commentaries and predictions on the property market. Liam Bailey, head of residential research from Knight Frank, commented on Financial Times that the house price we have seen is not “quite at the bottom”. He also added, “for the rest of the year, we will see alternating months of growth and falls”. Most forecasts, on the other hand, predicted further 5% – 10% decrease in house price will take place by the end of the year before it starts to stabilise.

There is no doubt that the mixed signals and data from Halifax and Nationwide last week created confusion in the housing industry. Financial Times clarified (4th April, 2009) the confusion could be a result from different sample of properties used by each index; it further explained that these data reports would have the disproportionate effect resulting from the small changes in proportion to the sharp fall in property transactions in the past year.

Taken as a whole, the abolition of 2009 annual property forecast by Halifax and Nationwide last year informed us the toughness and uncertainty of our current economy. Whether the contradiction aroused by the Nationwide report has led to more accurate predictions, the reliability of these predictions would still lie in a riddle under this volatility of the house market.

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