How honest is it to talk about house price inflation at 1.1% ?

The BBC is finally catching on to what is actually happening to house prices. A few months ago they were supporting their government by reporting the yearly average - without taking into account what is actually going on.

We've been here before when the last but one Labour government started choosing the time period to calculate inflation over, to keep the headline figure down.

House price inflation is reported at 1.1%. Doesn't sound that concerning, until you consider CPI inflation is at 2.5% and RPI in excess of 4% ( many people are experiencing far higher rates on inflation ).

So house prices are dropping over the last year at about -1% to -3% (roughly).

But the look at the data over the last year and you see something far more alarming.

I posted on this a few months ago in Nov and predicted house prices could drop by 7% (others have predicted 10%) - that's still not making the BBC's reports yet, but its just based on the current rate of change. I attach the graph again to show how this could have been easily foreseen 6 months ago - but too many people have an interest in maintaining denial about property prices. They refuse to accept something fundamental has changed.

The greatest fury will be in the South of England where people are mortgaged to the hilt - dropping Bank of England interest rates aren't translating into lower mortgages and vindictive council tax rises (Labour moving money to its core voters in the North) and vindictive stamp duty rates will cause rising anger.

But the greatest losses will be in the North and West, just as some of the greatest gains have been there.

No wonder Gordon is getting his brown pants and bicycle clips ready for addressing the PLP in panic mode next week !

PS Man in a Shed has decided to spend much of next week over at the National Statistics web site - as he thinks its going to be a good hunting ground for right of centre bloggers for the next year or two and probably contains lots on information that left wing journalists will be trying to ignore.