Property Prices Are Schizophrenic by Finance News Bulletin

Published: 31/08/07

If I was to believe, as the press seems to, that each monthly rise and fall in property-price enlargement reflected a real trend, I'd have supposed over the past few months that price enlargement was rising and falling and rising and falling and rising again, but most of all I'd be a deeply puzzled and perhaps psychotic individualTake the six sets of information that have come out of the Department of Communities and Local administration (CLG) this year, for example In January, they reckoned annual house cost inflation was 109%

In February, they supposed it went up to 118% It then went back down to 109% in March, up to 11

3% in April, down to 109% in May and up to 121% in JuneAs each set of information was released, it was immediately followed by articles talking about increasing, falling, rising, lessening and rising house price growth, with additional schizophrenic commentary about what this means: a market collide is imminent, home prices are set to rocket, there won't be much more growth this day, growth will continue to gather pace, properties are high-priced, we can still afford to buy our homes

The CLG's index is relatively novel, but these sorts of conflicting information on a monthly basis is common to all indices and reportsBewlidering property data is not now a phenomenon of 2007 Taking a rapid glance over old financial press releases, I see one from Nationwide from back in mid-2006 called home Price Growth Sluggish' followed by another from the building society later in the year called 'House cost Growth Moves Back Into twice Digits'The truth is, we can't read too much into monthly reports

What we can do is gather it all up to see what the general trends have been, and it doesn't take a genius to labor out that, for quite some time now, in most areas property prices have been rising pretty fast for years (10-12% yearly rates in the first half of 2007, according to CLG)Sadly, even collecting the data in this method, it still tells us only about the past and not the future The short-term future can go anywhere at any time, as I explained in 40% House cost Rise Unlikely

> If you enjoyed this article, you should like Why I Don't faith House Price Indices and comforting Property Predictions© Copyright 1998-2007, The assorted Fool Limited All rights reserved This material is for personal use only

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