Previous entries here covering French property prices as scored by the Fédération Nationale de l'Immobilier (FNAIM) have had an incredulous tone at the accompanying sanguine commentary of the organisation. Their latest quarterly missive treats readers to this claim:

"The idea that there are direct risks of contagion to the French property market from the year-old US subprime crisis well deserves rejection. Indeed, the mechanical selling obliging US households to take losses on their homes against a backdrop of collapsing prices, oversupply and reduced demand has not spread…However, the financial and stock market crises which have since broken appear to have definitely affected the health of the property market." (page 1)

This finesses, somewhat, prior more bellicose rejections. And, leaving aside the curious question as to where, according to the FNAIM, the current financial crisis originated, the declaration (unlike previous ones) seems to be actually supported by the numbers: the Q1 drop of –1.0% has been all but annulled by a Q2 rise of 0.9%.

This, say the FNAIM, translates to an annual 2008 forecast of +1.7% (page 1). Or 1.6% (page 6). Or 1.5% (page 7). Whichever, in fact, of the convenient methods, frequently mislabelled, that the reader prefers.

One explanation for this unexpected rush of good vibe is that the FNAIM retrospectively adjusts its monthly data once the quarterly data is known. Which is, of course, an invitation to compare the monthly releases to the quarterly ones.

Exhibit 1: FNAIM monthly versus quarterly data


Funny, isn't it, that the FNAIM’s adjustments say the exact opposite in aggregate of the raw(er) monthly numbers. Even the year-to-date number, at minus 0.1%, can hardly be judged as confirmation of the monthly data’s equivalent.

It is not a shock, therefore, that some have already questioned the integrity of the June adjustment; and it does seem FNAIM have plenty of latitude in both the samples they take and the opaqueness of their statistical methods. It is, for example, notable that the monthly end May comparables are remarkably different in composition and magnitude (but not direction) to those of June.

Exhibit 2: FNAIM monthly data for May

Why these gaps and jumps are unexplained is testament to FNAIM’s close-chested calculations, biased commentary requirements and locked down databases. On the other hand, it may be that FNAIM have actually discovered an asset class that is immune from the credit crisis despite its reliance on credit.

However, deciding which data are more representative of reality requires only a survey of general conditions. Down between 3% and 5% in a year looks accurate. 'Adjusted' flat year-to-date and year-over-year is laughable; and it is surprising the President of the FNAIM, René Pallincourt, risks so much credibility so stating.

That FNAIM deny the straight line relationship between subprime, French banking write downs, credit scarcity and falling prices is their choice. But torturing the data to lend statistical weight to that remarkable logic is – euphemistically – disingenuous.

Related articles:
Immobilier : les clignotants passent au rouge, Paris résiste
Nouvelle prévisions de baisse des prix de l'immobilier

Réactions des économistes à la production industrielle

HSBC chiffre à 0,5 point la perte de croissance liée au retournement immobilier

La baisse revue à la hausse

Sources: FNAIM monthly data; and quarterly data

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