We'd like to remind Forumites to please avoid political debate on the Forum... Read More »
Debate House Prices
In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non MoneySaving matters are no longer permitted. This includes wider debates about general house prices, the economy and politics. As a result, we have taken the decision to keep this board permanently closed, but it remains viewable for users who may find some useful information in it. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Understanding regional variances and historical house price crashes
IveSeenTheLight
Posts: 13,322 Forumite
I have mentioned a number of times regarding regional variation when discussing average house price rises or falls.
Many people refer to the house price crash of late 80's early 90's quoting it took between 8-10 years to recover.
I decided to evaluate an area I have a vested interest in and assess how it compared during the last house price crash.
Using http://www.hbosplc.com/economy/includes/19_01_08PostTownsData3.xls I looked at Aberdeen and found that in the last 20 years, prices dropped on average for this region in only 3 years of which they were not consecutive.
Each average year decrease closely matched the previous years increase (effectively knocking the average price back 2 years)
Now I know that this time its different and it does not mean that the results will be the same, however if we are to take any guidance on the previous crash, it would be possible to see a fall of 20% for Aberdeen taking the price back to 2006 prices.
If the data follows this trend, then we could see prices rising again the following year.
It's also worth noting as other posters have said that Scotland lags behind the rest of the uk due to the ripple effect from London. There are many arguments to this theory, but could be used to explain why prices in this area are still rising at present.
I do also see that the 1992 price was very similar to the 1997 price meaning that effectively there were about 5 years of stagnated prices. This too could also happen.
I have posted the figures below for your close scrutiny
but try havving a look at your own vested interest areas.
It could be a worthwhile exercise.
Aberdeen Average Price Increase / Decrease
on previous year
Annual Data – 1988 £42,027 No Data available
Annual Data – 1989 £45,881 9.17%
Annual Data – 1990 £59,112 28.84%
Annual Data – 1991 £65,060 10.06%
Annual Data – 1992 £72,447 11.35%
Annual Data – 1993 £65,869 -9.08%
Annual Data – 1994 £69,050 4.83%
Annual Data – 1995 £65,640 -4.94%
Annual Data – 1996 £71,948 9.61%
Annual Data – 1997 £73,037 1.51%
Annual Data – 1998 £79,022 8.19%
Annual Data – 1999 £83,656 5.86%
Annual Data – 2000 £78,390 -6.29%
Annual Data – 2001 £84,845 8.23%
Annual Data – 2002 £92,426 8.94%
Annual Data – 2003 £107,240 16.03%
Annual Data – 2004 £112,639 5.03%
Annual Data – 2005 £135,604 20.39%
Annual Data – 2006 £171,767 26.67%
Annual Data – 2007 £202,755 18.04%
Many people refer to the house price crash of late 80's early 90's quoting it took between 8-10 years to recover.
I decided to evaluate an area I have a vested interest in and assess how it compared during the last house price crash.
Using http://www.hbosplc.com/economy/includes/19_01_08PostTownsData3.xls I looked at Aberdeen and found that in the last 20 years, prices dropped on average for this region in only 3 years of which they were not consecutive.
Each average year decrease closely matched the previous years increase (effectively knocking the average price back 2 years)
Now I know that this time its different and it does not mean that the results will be the same, however if we are to take any guidance on the previous crash, it would be possible to see a fall of 20% for Aberdeen taking the price back to 2006 prices.
If the data follows this trend, then we could see prices rising again the following year.
It's also worth noting as other posters have said that Scotland lags behind the rest of the uk due to the ripple effect from London. There are many arguments to this theory, but could be used to explain why prices in this area are still rising at present.
I do also see that the 1992 price was very similar to the 1997 price meaning that effectively there were about 5 years of stagnated prices. This too could also happen.
I have posted the figures below for your close scrutiny
but try havving a look at your own vested interest areas.It could be a worthwhile exercise.
Aberdeen Average Price Increase / Decrease
on previous year
Annual Data – 1988 £42,027 No Data available
Annual Data – 1989 £45,881 9.17%
Annual Data – 1990 £59,112 28.84%
Annual Data – 1991 £65,060 10.06%
Annual Data – 1992 £72,447 11.35%
Annual Data – 1993 £65,869 -9.08%
Annual Data – 1994 £69,050 4.83%
Annual Data – 1995 £65,640 -4.94%
Annual Data – 1996 £71,948 9.61%
Annual Data – 1997 £73,037 1.51%
Annual Data – 1998 £79,022 8.19%
Annual Data – 1999 £83,656 5.86%
Annual Data – 2000 £78,390 -6.29%
Annual Data – 2001 £84,845 8.23%
Annual Data – 2002 £92,426 8.94%
Annual Data – 2003 £107,240 16.03%
Annual Data – 2004 £112,639 5.03%
Annual Data – 2005 £135,604 20.39%
Annual Data – 2006 £171,767 26.67%
Annual Data – 2007 £202,755 18.04%
:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:
0
Comments
-
I've just carried out a varied random check on other areas i.e.
Manchester
Newcastle
Liverpool
Glasgow
Edinburgh
Leeds
Cardiff
Dundee
Harrow
Hayes
Mitcham
Morden
Etc
Etc
It was interesting that many area matched similar results to the one I showed for Aberdeen.
Glasgow and Newcastle showed slightly more with consecutive years of price decreases.
The worst were the London boroughs.:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0 -
looks a good chart
interesting to see ipswich went year on year negative a couple of years back0 -
Fairly much as has been published before, but you've made one major error these figures aren't adjusted for inflation, which was a major factor during the last crash!0
-
My town only fell a total of 12% (from 88 - 94)0
-
mystic_trev wrote: »Fairly much as has been published before, but you've made one major error these figures aren't adjusted for inflation, which was a major factor during the last crash!
No, I didn't make an error, I kept it very simple realting only to actual house price averages.
When applying for a mortgage, does the salary multiplier take into account inflation or does it simply account for your income and apply a multiplier to it to assess affordability.
Same reason I have not taken into aco!!!! employment levels, gross income, population levels etc etc etc. Keep it simple and please do not try to skew the facts.
If people are looking for 20, 30, 40 or 50% house price drops, then they should also take into account inflation.
If you noted I did say
I do understand that if house prices effectively stagnate for 5 years, that with inflation or wagre rises, this means the properties become more affordable. It does however underly there is maybe not such an issue with negative equityI do also see that the 1992 price was very similar to the 1997 price meaning that effectively there were about 5 years of stagnated prices.
Sticking to topic, I think its very interesting to see how the UK average house price can be very much affected by the higher house price in London, both going up and coming down.
I wonder if any house price drop is going to see London affected far more than the rest of the country.:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0 -
According to this inflation totalled about 40% between 1989 and 1996. If you just ignore it then I don't really see what this proves.
If house prices don't change in nominal terms but inflation causes money to have 10% less value next year than this, you have seen a fall in house prices compared to other goods and assets.0 -
According to this inflation totalled about 40% between 1989 and 1996. If you just ignore it then I don't really see what this proves.
.
It would mean that the -ve equity fears are not so founded.
Like I said, each area is different.
In the area I looked at the largest decrease was over only one year which was a decrease of -9.08%.
This followed a year where there was an 11.35% rise
Essentially for the area I reviewed only,
if you bought a house pre 1992 then you never saw negative equity.
if you bought in 1992, then for 5 years the property was slightly lower or recovered to the same price. The largest drop was -9.08% but it recovered slightly the next year.
If you bought in 1993, you never saw any -ve equity (well I am forgiving the 229 pounds defference)
If you bought in 1994 within two years the price had recovered
If you bought in 1995 onwards you have not seen -ve equity
If you factor in mortgage payments reducing the capital, then the effective -ve equity is further reduced.
Like I say, its only a little good reflection on the house prices for each area during the last 20 years.
Look closely at your own area as an idea of how it may be affected during this hyped up crashIf house prices don't change in nominal terms but inflation causes money to have 10% less value next year than this, you have seen a fall in house prices compared to other goods and assets.
And how does this really affect peoples homes? Remember its not an investment, its a home :wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0 -
I would have expected Aberdeen to be the one place in the country that is different because of the oil impact.0
-
SouthCoast wrote: »I would have expected Aberdeen to be the one place in the country that is different because of the oil impact.
Like I said, this is the area I am interested in.
I did see similar results for many major locations outside London.
Please do however take the time to look at your own post code for your own analysis
http://www.hbosplc.com/economy/inclu...TownsData3.xls:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0 -
And for that reason, probably it is not one you could expect to keep bucking the trend.SouthCoast wrote: »I would have expected Aberdeen to be the one place in the country that is different because of the oil impact.After the uprising of the 17th June The Secretary of the Writers Union
Had leaflets distributed in the Stalinallee Stating that the people
Had forfeited the confidence of the government And could win it back only
By redoubled efforts. Would it not be easier In that case for the government
To dissolve the people
And elect another?0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 351.5K Banking & Borrowing
- 253.3K Reduce Debt & Boost Income
- 453.9K Spending & Discounts
- 244.5K Work, Benefits & Business
- 599.8K Mortgages, Homes & Bills
- 177.2K Life & Family
- 258.1K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.2K Discuss & Feedback
- 37.6K Read-Only Boards