Seasonal Adjustment

This takes into account seasonal variations in the property market to give a more accurate picture as to whether prices are moving up or down. It also enables better comparison with sales at the same time of year over a number of years.

It is important to take into account seasonal variations as otherwise house price figures can be misleading. House sales traditionally drop off at Christmas time and pick up again in the Spring.

Seasonal adjustment is often calculated using a technique called classical seasonal decomposition, which is also known as ratio to moving average. In essence this isolates seasonal variables and recalculates house price figures taking these into account. There is a variety of seasonal adjustment software on the market that can carry out this recalculation process. One that is commonly used, by amongst others the UK Government, is the US software X-12-ARIMA.

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