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

SilverStandard

chucky wrote: »

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:

What about silver not gold?

Like in this video

http://www.youtube.com/watch?v=nXPKdUWd6Lk&feature=quicklist





http://www.moneyweek.com/investments/property/uk-house-prices-will-plummet-look-at-this-scary-chart-14664.aspx

How many ounces of silver for the average UK home?

Regular readers will know that another chart I'm fond of posting, shows the ratio of the average UK House Price to Gold - in other words, how many ounces of gold it takes to buy the average UK home. Tom Fischer of Heriot-Watt University has kindly sent me the same chart, but for silver:

Here is a log version of the same chart.

When silver spiked to $50 in 1980, you could buy the average UK house for one thousand ounces of silver. A thousand ounces of silver now costs about £10,000, while the average UK house is now about £150,000.

HAMISH_MCTAVISH

SilverStandard wrote: »

So Hamish you are actually saying we have some 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?

We were a tiny bit below the long term mean in January 09. We are a tiny bit above it today. In January 2010, another 2.9% can be added to the long term mean, and prices may well drop back a bit over winter. Will we be above it or below it then? I have no idea.

Prices should still fall back a bit this winter. I've been saying that for ages, and it hasn't happened yet. Delighted to be proved wrong though.:D

As for your theory that a significant correction is required to take us back to the long term mean, it is not. We are more or less there now.

And real price rises of around 3%, plus inflation (another 2% or so) would mean nominal terms increases of 5% per year from now on would keep us on the long term mean.

In practical terms, that is around a 60K increase on a 200K house in just the next 5 years.
That'll do me just fine.:beer:

brit1234

HAMISH_MCTAVISH wrote: »

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

Please can you explain where this 2.9% comes from. Is it the sum of all that speculation, fraud, cheap credit and irresponsible lending?

Sustainable house prices go up with inflation if maintained. To rise above that you need to add value such as extensions.

I suspect your 2.9% additional lump is purely bubble economics

HAMISH_MCTAVISH

brit1234 wrote: »

Please can you explain where this 2.9% comes from. Is it the sum of all that speculation, fraud, cheap credit and irresponsible lending?

Was that the case in the 70's and 80's as well? Are you now claiming that fraud, cheap credit, and irresponsibible lending was rife back then?

Because when you remove the last boom, you still get pretty close to inflation plus 2.9% per year as a long term average.

Sustainable house prices go up with inflation if maintained. To rise above that you need to add value such as extensions.

If we built enough houses to keep up with populalation growth, you'd be right. We don't though, and never have.

Above inflation price rises over the long term are a direct result of a long term systemic housing shortage. Pure supply and demand.

House buildiing has always lagged population growth, and it's getting worse, not better. I expect the next 20 years will see the rate of HPI increase beyond inflation plus 2.9%, as there is no way we will build the houses needed. Time will tell.

SilverStandard

brit1234 wrote: »

Please can you explain where this 2.9% comes from. Is it the sum of all that speculation, fraud, cheap credit and irresponsible lending?

Sustainable house prices go up with inflation if maintained. To rise above that you need to add value such as extensions.

I suspect your 2.9% additional lump is purely bubble economics

Its a good point Brit has made.

Surely if you argue that house prices will always go up 2.9% above inflation then eventually price will be way above 3x earnings and no one will ever be able to get a mortgage. Wait a min........

HAMISH_MCTAVISH

SilverStandard wrote: »

Its a good point Brit has made.

Surely if you argue that house prices will always go up 2.9% above inflation then eventually price will be way above 3x earnings and no one will ever be able to get a mortgage. Wait a min........

What are the limiting factors on silver price rises?

From what I can tell, there is ongoing demand for silver, from investors, jewellers, and industrial users.

Yet there is a limit to how much silver that can be produced. There are only so many mines, and only so much production capacity.

It is ultimately all about supply and demand.

Why do you expect houses to be any different? There is a chronic shortage of housing. We don't build enough for a growing population. And have not done, over the long term.

We can stop HPI, if we can build 250,000 houses a year, every year, for the next few decades, starting immediately.

Chances of that happening? Zero.

SilverStandard

HAMISH_MCTAVISH wrote: »

What are the limiting factors on silver price rises?

From what I can tell, there is ongoing demand for silver, from investors, jewellers, and industrial users.

Yet there is a limit to how much silver that can be produced. There are only so many mines, and only so much production capacity.

It is ultimately all about supply and demand.

Why do you expect houses to be any different? There is a chronic shortage of housing. We don't build enough for a growing population. And have not done, over the long term.

We can stop HPI, if we can build 250,000 houses a year, every year, for the next few decades, starting immediately.

Chances of that happening? Zero.

You are right about silver 95% of all silver has been consumed and the last 5% will run out by 2020.

I dont think you can apply this to houses in the UK. If you look at the actual figures of all the new builds last few years a very high percentage are still empty dispite huge drops in asking price.

As you no doubt already know more people are living in less houses by bigger housholds and sharing etc.

I dont know where you get your figures from Hamish but just looking at all the empty new build blocks of flats around it doesnt look like a shortage to me.

CLAPTON

SilverStandard wrote: »

Its a good point Brit has made.

Surely if you argue that house prices will always go up 2.9% above inflation then eventually price will be way above 3x earnings and no one will ever be able to get a mortgage. Wait a min........

well... the long term growth in income is about 2-3% above the inflation figure... this is why we are richer now than 50 years ago

as people get richer they spend less (as a percentage) of their income on essentials like food and clothing and so have more to spend on holidays, toys and also on housing...

so a growth in house prices of 2-3% above inflation is sustainable assuming that over the long term real incomes grow.

SilverStandard

CLAPTON wrote: »

well... the long term growth in income is about 2-3% above the inflation figure... this is why we are richer now than 50 years ago

as people get richer they spend less (as a percentage) of their income on essentials like food and clothing and so have more to spend on holidays, toys and also on housing...

so a growth in house prices of 2-3% above inflation is sustainable assuming that over the long term real incomes grow.

If anything goes up 3% ABOVE inflation then eventually it will be so out of wack with everything else that goes up the same as inflation.

Think about it.

HAMISH_MCTAVISH

SilverStandard wrote: »

If anything goes up 3% ABOVE inflation then eventually it will be so out of wack with everything else that goes up the same as inflation.

Think about it.

What, like certain precious metals, for example?;)

But look, there are obviously limits on house prices.

The cost of buying a house, realistically, cannot ever exceed the cost of a lifetime of rent. At this point, buying a house becomes the worse option. Until that point, buying a house makes sense.

However, the cost of buying a house including all the interest is still only around one third of the cost of renting for a full adult lifetime.

Theres plenty of scope for prices to rise yet.

Particularly as the percentage of after tax income spent on mortgage payments in 1990 was 68%...... whereas today it is only around 30%.