A question for the optimists

mewbie_2

HAMISH_MCTAVISH wrote: »

Yes, I was referring to the two crashes before the 90's crash.

Both of which were far shorter than the 90's crash.

Do you mean the 1930's? That was longer surely?

mewbie_2

GettingMoreBearish wrote: »

Right ok who is chunky and shirley? !!!

Sorry, can't divulge info to newbies.

HAMISH_MCTAVISH

mewbie wrote: »

Do you mean the 1930's? That was longer surely?

:rolleyes:

If you look at the last 3 house price crashes you see 3 completely different timelines.

In the last crash prices "bumped along the bottom" for years, and of course the bears frequently use this as "proof" that there will be no rush to buy when the bottom is reached.

However in the crash before that prices only stayed at bottom for one year, from 1982-1983. Before climbing relentlessly for 7 years straight.

And in the time before that, prices only stayed at bottom for one year as well, from 1977-1978, before climbing sharply again.

In the 1990's crash it took 6 years for prices to fall from peak to trough.

In the 1970's crash it took 3 years for prices to fall from peak to trough.

In the 1980's crash it took just 2 years for prices to fall from peak to trough.

mewbie_2

HAMISH_MCTAVISH wrote: »

In the last crash prices "bumped along the bottom" for years, and of course the bears frequently use this as "proof" that there will be no rush to buy when the bottom is reached.

Fair enough. I'll use that one then.

Cannon_Fodder

As the 70s house price crash had no negative months, afaik (would love a link if you have a source for monthly figures in the 70s), it can hardly be said to have the same impact on sentiment as the 80s and 90s ones. Big drops from +40% YoY, but not losing anything, still no negative equity impact...

The 80s was the first, afaik, with any negatives, so was just getting people used to the idea that it was possible for a "real" crash.

The 90s took that lesson and embedded it in the population's psyche.

Why so many people are now overpaying mortgages, repaying MEWing, and tightening their belts generally, is because of the collective conciousness.

Fewer people survive from the 70s, so their memory of a pretty benign, paper-based, crash has less impact than all those now in their 40s who lived through the "longest" crash, as listed by you, and bring that experience to the current situation.

That's not to say it will be identical. Absent old factors, or newly created factors might affect the speed/depth/extent. But to discard the most recent piece of equivalent history, while latching onto older pieces is bizarre.

If the 90s "has little validity", then the 80s and 70s have even less.

baileysbattlebus

Cannon_Fodder wrote: »

As the 70s house price crash had no negative months, afaik (would love a link if you have a source for monthly figures in the 70s), it can hardly be said to have the same impact on sentiment as the 80s and 90s ones. Big drops from +40% YoY, but not losing anything, still no negative equity impact...

The 80s was the first, afaik, with any negatives, so was just getting people used to the idea that it was possible for a "real" crash.

The 90s took that lesson and embedded it in the population's psyche.

Why so many people are now overpaying mortgages, repaying MEWing, and tightening their belts generally, is because of the collective conciousness.

Fewer people survive from the 70s, so their memory of a pretty benign, paper-based, crash has less impact than all those now in their 40s who lived through the "longest" crash, as listed by you, and bring that experience to the current situation.

That's not to say it will be identical. Absent old factors, or newly created factors might affect the speed/depth/extent. But to discard the most recent piece of equivalent history, while latching onto older pieces is bizarre.

If the 90s "has little validity", then the 80s and 70s have even less.

I think the 1970's house price "crash" was inflation related - ie: inflation 20%+ and HPI say 4.5%, so although there no actual falls in the index house prices in real terms did fall - quite a bit. It was during the time of the oil crisis - inflation was rampant - I can remember that and the petrol rationing and the doubling of petrol prices etc, but I wasn't a homeowner then - I suppose at the time it looked as if prices had stagnated.

This is the chart that gets rolled out on here all of the time (real house prices)- but the actual house prices of the day don't reflect that.





Actual house prices below.

http://www.nationwide.co.uk/hpi/downloads/UK_house_price_since_1952.xls

and "real" house price - used in the chart above.

http://forums.moneysavingexpert.com/newreply.html?do=newreply&p=24699917

So, I suppose you takes your pick and makes your choices!

vivatifosi

Thanks for the links baileys. What I found particularly interesting is that in the past there seems to have been less value in an older house (presumably the outside bathroom and/or lack of central heating were among the reasons why) but now these features are standard there's little difference, if not a premium.

Just goes to show how the standard of and preference for types of housing has changed over a relatively short period of time.

Cannon_Fodder

re the 70s, in terms of affecting sentiment, I think "no actual falls" has more weight than "real terms falls".

Would even the Daily Mash run a headline "House prices pretty flat, but in a year inflation will make it seem like a fall..."

?

HAMISH_MCTAVISH

Cannon_Fodder wrote: »

re the 70s, in terms of affecting sentiment, I think "no actual falls" has more weight than "real terms falls".

Would even the Daily Mash run a headline "House prices pretty flat, but in a year inflation will make it seem like a fall..."

?

Probably correct, plus of course in the 70's less reporting was done on this sort of thing in general anyway.

But sentiment is a fickle thing. 9 months ago, when sentiment was awful, who would have thought we'd see 7 months in a row of rising prices....

Cannon_Fodder

Getting confused, thought it was said to be 6 after Nationwides August figures...?

Now re-reading the Nationwide release, its only 4...?

Average UK House Price Long Term Real House Price Trend
Annual % Change in House Prices 3 Months on Previous 3 Months % Change
Historical Data
Month Monthly Index Monthly Change Latest 3 months on Monthly Index Annual Change Average Price
Q1 93 = 100 % previous 3 months Q1 93 = 100 % £
seasonally adjusted % change not seasonally adjusted
2008
Aug 326.9 -2.0 -5.4 328.5 -10.5 164,654
Sep 321.2 -1.8 -5.5 322.8 -12.4 161,797
Oct 316.8 -1.4 -5.3 316.9 -14.6 158,872
Nov 316.2 -0.2 -4.7 316.1 -13.9 158,442
Dec 308.1 -2.6 -4.2 305.3 -15.9 153,048
2009
Jan 304.6 -1.1 -3.7 300.2 -16.6 150,501
Feb 299.2 -1.8 -4.4 294.7 -17.6 147,746
Mar 302.5 1.1 -3.7 301.1 -15.7 150,946
Apr 301.9 -0.2 -2.7 302.9 -15.0 151,861
May 305.6 1.2 -0.2 307.2 -11.3 154,016
Jun 308.8 1.0 1.1 312.1 -9.3 156,442
Jul 313.0 1.4 2.7 316.9 -6.2 158,871
Aug 317.9 1.6 3.3 319.6 -2.7 160,224

http://www.nationwide.co.uk/hpi/historical/Aug_2009.pdf page 3...

??

http://www.nationwide.co.uk/hpi/historical/Apr_2009.pdf confirms it was originally -0.4%, presumably revised since, but still negative..



What are you basing 7 on...?


Edited to add; I see it, you are taking non seasonally adjusted, just because it suits your spin.

I think we need to have a "its not 6 or 7 months really, but only 4 months" thread, it is after all the headline figure that matters to sentiment...