Wednesday, February 5, 2014

Change In The Way EFF House Price Index Is Calculated

Here's a comparison between the new index (published Jan'14) and the old index (published Dec'13, indexed by me, Jan'03=1,00) from January 2012 to December 2013 (the last month we have old index data for):

Notice how the monthly fluctuations follow a new pattern. The gap between the new index and the old index (new minus old) is not stable as you can see from this graph (data from Jan'10 to Dec'13):

Note especially the sharp change in January 2013. It looks like the high growth between January 2012 and January 2013 is smoothed down in the new index. The adjustment becomes again smaller throughout 2013, coinciding with sharply slowing growth.

I don't know yet what to think of this. What we can be sure of is that the Jan'13 adjustment gives us higher year-on-year growth in Jan'14 compared to what it would have been in the old index, or in the new index had the gap between the new and old been more stable. It also makes it more likely that year-on-year growth in Feb'14-May'14 will be significantly lower than it was in Jan'14 (-1,0 %, which was surprisingly strong...), doesn't it? Help me out here, quants :-)

And if you think I have done a "Reinhart-Rogoff" with my Excel, let me know as soon as possible.


  1. Hi and thanks for a good blog,
    I’ve had a look at the EFF figures and found the following:
    * Reported average nominal price per m2 for 31.12.2013 was 29 692 NOK.
    * Reported average nominal price per m2 for 31.01.2014 was 31 070 NOK.
    This implies a monthly change of +4.64%, while the reported monthly change is +2.4%. As you’ve already pointed out, things don’t add up…
    If the monthly change was 2.4%, the average nominal price per m2 for 31.01.2014 would obviously be 29 692*1.024 = 30 405 NOK.

  2. Do we really have a falling marked wrapped into numbers that shows raising prises?
    I could be, because, it is the bank/governments interests that we keep borrow money for everything. Cheep money is not cheep when the system fails.

    1. Nice, a man from the north that thinks, There is more world to learn than yours. Get out of the last comunist country in Europa and take a deep breath. Life is in the south, my boy.