Get ready for the storm

Charterhouse

Post RPI vs HPI, that's where the real (non-exponential) trend becomes clear and the idiocy of the last 7 years becomes totally apparent. That doesn't mean that it's going to come crashing down any time soon but it at least is a relevant graph unlike the other ones that people like to post.

chucky

Charterhouse wrote: »

Post RPI vs HPI, that's where the real (non-exponential) trend becomes clear and the idiocy of the last 7 years becomes totally apparent. That doesn't mean that it's going to come crashing down any time soon but it at least is a relevant graph unlike the other ones that people like to post.

but that would just tell one side of the story... which isn't really news...

the intention of the graphs wasn't to say that houses are cheap or even expensive but to show the cycles that we've had and when the best times to buy property were.

people like to moan that property is unaffordable, maybe it is but what they don't realise is that more often than not it's been expensive.

marklv

Conrad wrote: »

The fundamental point missed by the official stats and academics is the real earnings are higher than reported earnins. Trust me I witness this daily.

Do you mean that people are fiddling the taxman? Not easy to do if you are on PAYE.

RDB

Linton wrote: »

There will come a time in the future when they will be undervalued again.



Disagree.

Are you really saying you think house prices will never be undervalued ever again?

Or just in our lifetime? What are you saying?

Charterhouse

chucky wrote: »

but that would just tell one side of the story... which isn't really news...

the intention of the graphs wasn't to say that houses are cheap or even expensive but to show the cycles that we've had and when the best times to buy property were.

people like to moan that property is unaffordable, maybe it is but what they don't realise is that more often than not it's been expensive.

Well, back to 1975 at least, that isn't the case at all. It's only the last 10 years that really mess up a straight line trend in line with RPI.

IveSeenTheLight

92203 wrote: »

Interestingly, you aren't really countering the OP's argument. You are only quoting the median trend in house prices, which has been skewed by 10 years of unprecidented house price inflation, driven by a deregulated credit market, and a crippled pension sector leading to increased investment in property as a source of income for retirement.

What you have neglected to state, is that the same organisation who provided the figures you quoted has stated that the average house price is now almost 5.5 times the national average wage, whereas the long term average earning - house price ratio is 4:1

You say it has been skewed by 10 years of HPI.
What about the 10 years it was below the line?

Don't these all contribute to mark the average over the whole period?

IveSeenTheLight

Procrastinator333 wrote: »

Hamish, do you have a link for the 31 and 37%? just curious how they arrive at the numbers.

E.g do they just take average wage, average house price and average mortgage interest rate? Or does it take some sample of homeowners, ask them their salary and mortgage payments.

Here you go.
See the second tab

http://www.lloydsbankinggroup.com/media/excel/01_05_09Affordability.xls

Procrastinator333

IveSeenTheLight wrote: »

Here you go.
See the second tab

http://www.lloydsbankinggroup.com/media/excel/01_05_09Affordability.xls

I'm doing this off my phone, so difficult to navigate round those pages, I see the tables, but is the methodology there also?

IveSeenTheLight

Procrastinator333 wrote: »

I'm doing this off my phone, so difficult to navigate round those pages, I see the tables, but is the methodology there also?

The link is directly to the tables which shows the calculations and there is no reference to the methodology on that page.

It is may be possible to find out elsewhere on the LLoyds website.

Indeed the parent page has the below statement
http://www.lloydsbankinggroup.com/media1/research/halifax_hpi.asp

About Halifax House Price Index

The Halifax House Price Index is prepared from information that we believe is collated with care, but we do not make any statement as to its accuracy or completeness. We reserve the right to vary our methodology and to edit or discontinue the indices at any time for regulatory or other reasons. Persons seeking to place reliance on the indices for their own or third party commercial purposes do so at their own risk.

However consider this, regardless of the methodology and I assume you may wish to discredit it, if the methodology is the same throughout the period referenced i.e. 27 year data, isn't it a worthwhile comparison when gauging peaks, troughs and averages throughout that period?

You may wish to also consider that the basis for poeple borrowing money has also changed over that period i.e. a change from single income multipliers to joint applications.

Many lenders also have changed from income multiples to disposable income as a better affordability check.

Linton

RDB wrote: »

Are you really saying you think house prices will never be undervalued ever again?

Or just in our lifetime? What are you saying?

I am saying that if you are looking at that property that is bought to live in as opposed to as an investment, the concept of under or over valued is meaningless - the current value almost by definition is the right one, being the one where the number of buyers equals the number of sellers.

I am also saying that FTB house prices will always be at the limit of what most potential FTBers can afford. The only reason for house prices to fall will be if a lot fewer people can afford to buy them because of the wider economic situation. So compared to now, houses could be cheaper, but it wont do the majority of people wanting to buy any good because what they can afford will also have fallen.