Devolution for London?

I'm getting increasingly concerned that the house price indices aren't showing us any useful information.

The last four or five issues from several of the index-makers contain the statement that the average national house price has been driven upwards by a strong performance in the London market - particularly at the top end of that market.

I suspect that you would get very different trends if you took one of two alternative approaches.

First of all, you could simply leave London out of the indices and look at 'UK ex London'. Of course you'd need to define 'London' - inside the M25? a given number of boroughs? But that might deliver news of more interest to people living elsewhere in the country.

(In fact, the ODPM index, because it is expenditure-weighted, actually gives more rather than less importance to the south-east and London figures. So it's the reverse of what I'd call useful for the nation as a whole. RightMove is also expenditure-weighted.)

Or secondly, you could leave out houses above a certain amount as atypical. Now that is a bit of a judgmental fix-up of course - but it would give a more useful answer on bog standard properties.

But actually the third approach you could take wouldn't involve any omissions. You could simply use a median rather than a mean price as your average. As far as I'm aware, none of the current indices are doing this (though the Halifax and Nationwide assess the price of a 'typical house' - which probably does help, though apparently the Halifax hasn't updated its idea of a typical house since 1983...)

But perhaps we do need to devolve London as far as house prices are concerned.

By the way, there's some good stuff on Home.co.uk for stats nerds on the indices and how they are constructed.

Resale value versus intrinsic value

Merger mania seem to have hit the stock market. Every day I hear of a new private equity story, a new MBO story or a sector consolidation trend.

I wonder increasingly whether valuations can be sustained on this basis. The market now appears to be valuing stocks on their resale value to a trade buyer - that is, pricing in efficiencies and synergies that will only ever occur if a bid is made - rather than on their intrinsic value as free-standing businesses.

Now that rather reminds me of the property market. I made enquiries about a couple of houses recently. Almost the first thing I was told by the agents was that it would be a good investment because I could sell it again for far more than I paid for it. (Seems to me they are assuming I'm not going to try to flip it...)

Excuse me? I don't walk into Tesco's and get told to buy the ready Lasagne because I'll be able to sell it for 5p more than I paid. I'm looking for a house. ie, somewhere to live. I am worried about things like its council tax band, how much space it has, energy efficiency, whether it's got a cat flap. I'm not thinking about selling it.

So why are they telling me first and foremost about the investment value?

Of course intrinsic value is a concept with a long and fraught history. How exactly you calculate it is tricky to say. But I do feel that this market in both equity and property has gone too far towards hoping for large capital returns and too far away from calculating earnings and rental yields. Which, after all, are what really drive the price for most stocks and houses.

Consumer resistance?

We're used to queues outside game shops, pre-ordering, massive crowds all trying to get the latest console. The Nintendo wii was no exception despite its name.

But the new Playstation 3 just doesn't seem to have inspired this excitement. Why?

Well, partly, I think, lack of backwards compatibility. You're not going to be able to play all your PS2 games on the PS3 and that has taken the shine off the console.

And also, it's the wrong time of year. Without the Christmas rush, there's less urgency to the release. Besides, many people are probably still stuck with paying off the credit cards from Christmas.

But I suspect there may be a turning point in the cycle for consumer electronics. Because we've also seen yet another profit warning from digital photography retailer Jessops. As I suspected, DSLRs are just not selling the way that compacts did - and with prices coming down, the retailer has been left heavily exposed.

I'm getting a feeling that consumers might be getting tired of new products. They've done promiscuity, they've done gadget-swapping and multiple peripherals - they just want to settle down and use what they have. Or perhaps they just don't have the money for more.

I wouldn't be looking to the consumer side of the tech sector for growth right now.