Nationwide +1.3 (-6.2 YoY)

IveSeenTheLight

Graham_Devon wrote: »

Yes, so that does answer my question. The trend line is pulled up alongside prices. In 2 years, the trend has moved from 140k to 160k. (well around 155k).

I'm not really sure what I am trying to prove here, but I think I'm correct in saying that the trend line is just following the average of the ups and downs, therefore does not really give an indication that currently 160k is the level we should be at today.

If it fell to 100k over the next 5 years, the trend line would not sit at 160k or keep rising, it would fall, not slope downwards, but the whole line would be pulled down to a lower figure.

I don't believe it would slop downwards, it would simply have a lower annual average interest increase. Maybe down to 2.5%

Essentially the curve would still be a curve but less curvy
Remember this is a long term trend and each new year of data is included in over 20 years of data when invariable for the majority of the time, house prices were lower.

So in short Graham, according to this set of data, it does indicate that house prices should be at the long term trend today, similarly it showed that actual prices were above the long term trend in 2007 and needed to correct.

If actual prices went below the trend line, would would see the average yearly growth interest lower by a fraction of a percent, but it would indicate that house prices were below the long term trend and would need to correct upwards

System

Graham_Devon wrote: »

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!

You've got to be kidding me.

Graham_Devon

Really2 wrote: »

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.

The line would never dip in any recession.

Its a line that cannot dip. It's a static line that can curve and that is all. I do know what I'm on about and I don't think I said anything confusing neither did I say it would dip.

All I said is...

If it fell to 100k over the next 5 years, the trend line would not sit at 160k or keep rising, it would fall, not slope downwards, but the whole line would be pulled down to a lower figure.

chucky

Graham_Devon wrote: »

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!

it doesn't include historically low interest rates

Graham_Devon

chucky wrote: »

it doesn't include historically low interest rates

Sorry

In any case, mortgage rates which are the rates people will be paying, are not historically low, base rates are. I was paying less than a FTB will be today on a fix in 2006!

Really2

Perhaps the clincher is why do they need the trend line to fall.

Oh yes to make that stupid greif graph look credible.:)

Graham_Devon

Really2 wrote: »

Perhaps the clincher is why do they need the trend line to fall.

Oh yes to make that stupid greif graph look credible.:)

I just wanted to make sure I was thinking correctly before I said anything so I could answer ISTL.

That is all.

Really2

Graham_Devon wrote: »

The line would never dip in any recession.

Its a line that cannot dip. It's a static line that can curve and that is all. I do know what I'm on about and I don't think I said anything confusing neither did I say it would dip.

All I said is...

Graham_Devon wrote: »

If it fell to 100k over the next 5 years, the trend line would not sit at 160k or keep rising, it would fall, not slope downwards, but the whole line would be pulled down to a lower figure.

Read the post above and this.

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.

You really need to improve your short term memory,

That is what I was refering to.

chucky

IveSeenTheLight wrote: »

So in short Graham, according to this set of data, it does indicate that house prices should be at the long term trend today, similarly it showed that actual prices were above the long term trend in 2007 and needed to correct.

If actual prices went below the trend line, would would see the average yearly growth interest lower by a fraction of a percent, but it would indicate that house prices were below the long term trend and would need to correct upwards

why haven't any of the more pessimistic negative posters mentioned that the Nationwide data may have over-corrected itself and will reduce due to the low volumes... :rolleyes:

IveSeenTheLight

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.

Graham, ITS A LONG TERM TREND

As you can see from the NW graph or the Lloyds one you posted, actual prices will go above and below the long term trend.

If you want stability, the rather than over and undershooting this trend, you really need actual prices to follow the trend as close as possible.

This is what historically over the long term average, what house prices have averaged out increased by each year.

If your calling for an undershoot of the trend (which is quite probable going by historical evidence) then prepare for rampant HPI again as it re-corrects to the long term trend and (again by historical evidence) overshoots.

I gaurantee it will not go down to £100k and then start from a new yearly inflation adjusted trend line.