Reading different threads (and media articles) in the NI Forum lately, it has struck me how some people view house price movements as being more liquid than they really are. Commodities, shares, currency speculation etc. are good examples of 'liquid' investments, the prices can fluctuate from day to day and the investment can be converted to cash quickly. House Prices are not liquid, the prices do not fluctuate between +ve and -ve quickly and the 'asset' is slow to convert to cash.

Therefore, my point is - now that we are starting to see -ve quarterly and monthly data, how likely is it that we will start seeing +ve quarterly and monthly data soon?

Now I have to get something out the way first - I am not trying to 'talk the market down' here (and I feel that any such accusation is unfounded), I am simply just trying to look rationally at the data that is available and apply some logic to it's movement based on previous historical data. Therefore, if we look at S.East England in the 90s (excluding London) we can see the lethargic nature of the house price correction there:

Click to view attachment

It is important to stress that this data (available from Nationwide’s website - actual Quarterly Avg. HP data - not HP index) is NOT adjusted for inflation. Hence, a house price of c.£80K around 1990 is not the same as a house price of c.£80K around 1999.

If you want inflation adjusted data than I can't help! (Talksalot's the man but his got enough on I'm sure).

Anyway, back to topic, from the above example, you can see that once the data has been averaged on a quarterly basis there is little deviation form the trend of decline - bottoming - incline over a 10 year period.

I am not suggesting that a similar pattern will be experienced with regard to NI; I do not have a crystal ball! but I thought it worthwhile to illustrate the illiquid nature of house price movements using a 'known' example.

Criticisms welcomed