(click on the chart for a sharper image)
If you want to understand what is happening to house prices, you must look at a chart. Today, the Nationwide produced their monthly survey of house prices. Unfortunately, the media reported this data by producing a battery of misleading percentage growth numbers.
The plan facts are that the Nationwide data shows a substantial nominal price drop since October, when prices peaked. In percentage terms, prices are down almost 4 percent lower than the peak.
If prices continue to fall at the rate we have seen over the last five months, then we are likely to see an 8.7 percent annualized nominal fall in prices.
Assuming that the RPI inflation rate remains at 4 percent a year - a reasonable assumption since it has been at that level for around two years - then in 12 months time, the real value of housing is likely to be about 13 percent lower than today.
The crash is here.