Conflict over house price trends

TWO PRICE indices published yesterday give contradictory pointers to the state of the housing market. One showed prices falling by 2 per cent in November, while the other showed a slight rise in prices over the month.

The Halifax building society, the biggest, reported that house prices rose by 0.1 per cent during November - a reversal in the trend of falling prices in the previous four months. This was only the second monthly rise during 1992 and made an annual average fall in house prices of 7.9 per cent.

Gary Marsh, Halifax's economist, said: 'We are hopefully at the bottom of the market. These figures prove that the dreadful September figures were a blip caused by the ending of the stamp duty holiday. But housing market recovery remains dependent on the outlook for the economy as a whole and particularly on employment prospects.'

The 2 per cent fall in prices recorded by Nationwide, the second biggest building society, was based on a small number of transactions, Tim Melville-Ross, its chief executive, said. Many of them will have been poor-quality repossessed houses and forced sales. The average house as measured by the Nationwide has fallen by 9.4 per cent over the past year to pounds 51,959. The average house price as measured by the Halifax is pounds 61,879.

This gap is one explanation for the difference in price trends. Steve Perry, Nationwide's business analysis controller, said. 'Our typical house is cheaper as we take a 10-year moving average to reflect the properties actually being bought and sold.'

John Wriglesworth, housing analyst at stockbroker Phillips & Drew, said: 'It's far too soon to call the end of recession. A rise of 0.1 per cent is nothing to get excited about.'