HousePrices double every X no of years- so last X years went up 300% correction?

SilverStandard

Im not making a statement more asking a question.

People often say house prices double every so many years. I say yes over the long term that is right, but they have been more than doubling this last boom.

How many years of falls to make the correction down to the mean long term average of only doubling every so many years?

sjaypink

Depends on what the original hypothesis is/ was?

I mean how many years the 'X' stands for- cos its not a rule is it, its debatable...

Anyhow, several, is my guess

phil_b_2

I personally dont pay much attention to averages, 'what should of happened', and hypothetical cycles. Apparantly we are way overdue a volcanic eruption and meteor strike so should all be dead, buy hey ho.

I think things can happen to make previous cycles (coincidences?) break and render them redundant as a way of predicting the future. Recent actions in the banking sector and housing market look like a good example.

chucky

it all depends when you start your cycle.

for example an average of 7% per year HPI over a 10 year period would double house prices.
if you started that in 1997 you would be right but if you started it in 2005 it would tell you a different story.

HAMISH_MCTAVISH

SilverStandard wrote: »

Im not making a statement more asking a question.

People often say house prices double every so many years. I say yes over the long term that is right, but they have been more than doubling this last boom.

How many years of falls to make the correction down to the mean long term average of only doubling every so many years?

House prices only double every 10 years or so in nominal terms. When you look at real, inflation adjusted figures, the results are somewhat less spectacular. Still solid, but not nearly as dramatic.

This is the inflation adjusted, real terms, house price history for the last few decades....




House prices actually rose from around 67K to around 170K in the course of 32 years, when you look at it in todays money, ie, removing inflation.

People that say they double every 7 to 10 years or so are including inflation.

The mean long term average is inflation plus 2.9%.

Shown above as the red line.

We are almost on (a smidgeon above, actually) the mean long term average today, and in fact were slightly below it back in february. No significant further falls are required to take us to the mean long term average though.

SilverStandard

chucky wrote: »

it all depends when you start your cycle.

for example an average of 7% per year HPI over a 10 year period would double house prices.
if you started that in 1997 you would be right but if you started it in 2005 it would tell you a different story.

OK chuck take your double every 10 yrs or so.

If you go back 100 years this is near as damn it bout right, exept the last 10 years that is.

Maybe over the next 10 years of falling/stagnation it will still prove true???????????

chucky

SilverStandard wrote: »

OK chuck take your double every 10 yrs or so.

If you go back 100 years this is near as damn it bout right, exept the last 10 years that is.

Maybe over the next 10 years of falling/stagnation it will still prove true???????????

depends if you want to take a 10 year period. it looks like you're trying to prove a particular point with falling/stagnation point.

20/25 years is probably more accurate as you have more economic cycles or even recessions within that period that would correct house prices.

HAMISH_MCTAVISH

chucky wrote: »

20/25 years is probably more accurate as you have more economic cycles or even recessions within that period that would correct house prices.

Or just look at the actual long term mean.... WHich is inflation plus 2.9% per year, as shown above.

chucky

HAMISH_MCTAVISH wrote: »

Or just look at the actual long term mean.... WHich is inflation plus 2.9% per year, as shown above.

or even price it in Gold and current house prices are at 1996/1997 levels.

either gold is expensive or house prices are cheap - don't mention this to the HPC gold bugs it will confuse them and make them very angry!!! :eek:

SilverStandard

HAMISH_MCTAVISH wrote: »

Or just look at the actual long term mean.... WHich is inflation plus 2.9% per year, as shown above.

So Hamish you are actually saying we have some more falls in store to get back to the figures you quoted?

I never thought I would see the day when you would admit more falls were in store.
Im sure you will have some answer for this and end up saying no more falls?

nembot

Generally prices go up in line with inflation apart from the boom years (basically everyone with an interest in the market ramping and to be fair expected).

These boom years distort the real figures and as we've seen since 1996 to 2006 most houses had doubled in price, sometimes moreso.

Without the boom years, would imagine it'd take at least another 10/15 years to have reached the point we are now.

Tricky question if you want an answer to cover all contexts.