Nationwide’s house price index for April 2009 showed prices falling by 0.4%, but its figures showed a £915 rise in the cost of the average home.
This is Money, 30 April 2009
How did house prices fall when the average home went up in value?
Simon Lambert, assistant editor at This is Money, replies: The Nationwide’s house price index for April threw up an odd statistical anomaly.
It reported that house prices fell by 0.4% from March to April, at the same time as the average home rose in value from £150,946 to £151,861.
So how can a £915 rise in the cost of property translate into a 0.4% fall?
The answer lies in the dark arts of seasonal adjustment.
Nationwide’s chief economist Fionnuala Earley explains that the idea behind seasonal adjustment is to be able to compare months that traditionally are busy with those that are not; for example, a fair comparison between April and November.
