Nationwide +1.3 (-6.2 YoY)

Graham_Devon

shakerbaby wrote: »

In bull world it stays the same if prices drop but curves up if prices rise.

I hope I have clarrified it for you. :beer:

Wayhey, have you just admitted your a bull

IveSeenTheLight

Graham_Devon wrote: »

So if prices over the next 10 year rose 500%, the trend line would not curve upwards?

What I'm getting at basically is I'm wondering whether the trend line will be pulled up or down by prices.

It will marginally be pulled up and down by prices, but remember that it's a long term trend and caters for the historical prices as well

Graham_Devon wrote: »

Hence why the trend line on that graph is actually a curve, not a line. If it was a line, it would end up around 120k, not curving up to 160k as it does.

It's a curve because it reflects the annual percentage increase currently at 2.9% for the data.

For it to be a linear line, house prices would have to go up the same amount each year.

If you had £100 in a 5% savings account, you end up with £5 interest (not discounting tax:))
The following year you get £5.25 and the next £5.51 and so on.
thus the same percentage equates to an increase in nominal value, hence the curve

Graham_Devon

IveSeenTheLight wrote: »

It will marginally be pulled up and down by prices, but remember that it's a long term trend and caters for the historical prices as well



It's a curve because it reflects the annual percentage increase currently at 2.9% for the data.

For it to be a linear line, house prices would have to go up the same amount each year.

If you had £100 in a 5% savings account, you end up with £5 interest (not discounting tax:))
The following year you get £5.25 and the next £5.51 and so on.
thus the same percentage equates to an increase in nominal value, hence the curve

Thanks, just wanted to make sure my thoughts were correct and that the line is weighted and pulled up and down by prices.

Therefore, to answer your original question based on the trend line, no

Really2

Graham_Devon wrote: »

So if prices over the next 10 year rose 500%, the trend line would not curve upwards?

What I'm getting at basically is I'm wondering whether the trend line will be pulled up or down by prices.

I think it does, but I'm not too sure. Hence why the trend line on that graph is actually a curve, not a line. If it was a line, it would end up around 120k, not curving up to 160k as it does.

It depends on many other factor like inflation that is why it is real house prices.

So if house prices went up 500% it is likely general inflation would have gone up at least the same also.

Graham_Devon

This is what I mean.

This trend line is obviously screwed and gives no indication that house prices have reached "normal" levels once they hit it.



Therefore, to me at least, all this talk of "house prices are now at average levels" is somewhat falsified.

chucky

House prices may have have fallen about 10%/15% or 20% (or whatever you like) but the cost of buying has dropped by around 40% (based on long term fixed interest rates etc...)

I think it would be useful to see a chart showing 'the cost of buying a house' rather than just the house price :rolleyes:

Really2

Graham_Devon wrote: »

This is what I mean.

This trend line is obviously screwed and gives no indication that house prices have reached "normal" levels once they hit it.



Therefore, to me at least, all this talk of "house prices are now at average levels" is somewhat falsified.

Like I said 70/80 prices never dropped nominaly, prices only dropped 20% last crash nominaly.

Most of the "real house prices" are effected by infaltion.

As you will see the last two crashes the line did not dip either.

We went over it the other day, have you forgot already?

It may bow a bit but it will not just drop, so if drop carried on the above the crash would keep getting further and further away from the mean.

shakerbaby

Graham_Devon wrote: »

This is what I mean.

This trend line is obviously screwed and gives no indication that house prices have reached "normal" levels once they hit it.



Therefore, to me at least, all this talk of "house prices are now at average levels" is somewhat falsified.

You are indeed correct sir however the bulls in all their falsified wisdom what others to believe this nonsense.

Graham_Devon

chucky wrote: »

House prices may have have fallen about 10%/15% or 20% (or whatever you like) but the cost of buying has dropped by around 40% (based on long term fixed interest rates etc...)

I think it would be useful to see a chart showing 'the cost of buying a house' rather than just the house price :rolleyes:

Some stuff about this here:

http://www.thisismoney.co.uk/mortgages-and-homes/article.html?in_article_id=482092&in_page_id=8

Rmember reading it ages ago!

julieq

It's an exponential trend line based on the starting point and assuming a growth of 2.9% a year (or whatever is on the top of the graph), which is the average historically over the stated period. i.e. it is historically based data forming a baseline which is extrapolated very slightly into the future.

To shift it significantly you would need stupidly large increases. It's curving up because of the compounding effect.

The whole point is that it gives a stable baseline. It doesn't wobble up and down with prices. It is the same measure as on the famous HPC graph.