Mortgage Lending for new purchase up 19%.

IveSeenTheLight

Graham_Devon wrote: »

Can you see the curvature.

Oh, do I see a trend line argument?

Can you remember why it is curved?
It's because it's compounded.

Imagine you have £100 in a bank earning 3% nett interest.
After year one you have £3 interest so £103.
The next year you have £3.09 interest so £106.09
The next year you have £3.27 interest so £109.27
and so on.
Each year hase the same interest 3% (or 2.9% in the case of house prices, yet the compound effect means you earn more in monetry terms, thus you get a curved line.

Here's the £100 3% yearly interest in graph form
See the curved line due to compound interest.
It doesn;t deter that the average yearly interest was 3%

DervProf

HAMISH_MCTAVISH wrote: »

Except as prices fall, it brings many vendors into negative equity, and it drops even more vendors into a worse LTV bracket, making it no longer viable to sell and move.

So they don't sell, they remove their house from the market, and supply reduces, driving up prices again.

So effectively, prices can`t fall, no matter how high they go.

Ain`t house prices brilliant !

HAMISH_MCTAVISH wrote: »

Rinse and repeat.

Patent applied for.

DervProf

Graham_Devon wrote: »

Can you see the curvature.

Oh, do I see a trend line argument?

I was thinking about that curvature the other day, as a matter of fact.

It appears that the rate of house price increase is indeed increasing.

I was about to assist you in your argument, but despite having indulged in a couple of beverages, I can see the light that ISTL has lit.

£x + 3%, rinse and repeat.

Except with property it`s £x + 3% + a little extra help from the Halifax.

chucky

Originally Posted by Thrugelmir
A long way from the boom years that drove prices upwards.

IveSeenTheLight wrote: »

Prices were rising in 2009

don't......

the old boy will get upset again...

HAMISH_MCTAVISH

DervProf wrote: »

So effectively, prices can`t fall, no matter how high they go.

Ain`t house prices brilliant !

House prices?

Sure, they can fall, if the right conditions exist.

Such as a 17% vacancy rate in Ireland, versus 3% in the mainland UK.

Or an 11% vacancy rate in the USA, and of course the ability to use "jingle mail" with no fear of ever being pursued for the debt.

Or in Japan, with a declining population and shrinking household numbers, along with almost zero immigration.

But in a market where a massive and long term housing shortage exists, with rising population, record low housebuilding, insecure tenancy laws, expensive rents, and a proven tendency for supply to shrink whenever prices fall, you have to admit the conditions here are pretty far from ideal for a great big housing crash.

Procrastinator333

IveSeenTheLight wrote: »

Here you go, see if it helps

For me, the issue with looking at the trend line is that it really does depend where you are in the cycle so to speak. If we were about Q1 1990, the real house price would have fallen a bit of the peak, but not all the way and the trend line would be significantly higher than where it sits now we have the next 10 years of data.

If we look at today's position. If prices were to fall further, this would be a repeat of the above. If they rise, the trend line is not high enough.

So in my opinion you are both right, you are just making different points. The trend line is a matter of fact and not debateable. Today as it stands we are sitting on the long term trend line. However, if prices do fall, the trend line will falll away and a year or 2 on prices will have been far ahead of the trend line as we look back at this point in time.

Just comes back to your opinion on the direction of house prices.

IveSeenTheLight

Procrastinator333 wrote: »

If we were about Q1 1990, the real house price would have fallen a bit of the peak, but not all the way and the trend line would be significantly higher than where it sits now we have the next 10 years of data.

Not true.
Look at the trend line on the linked data from 2007
http://www.nationwide.co.uk/hpi/historical/Jul_2007.pdf

prices were above but the long term trend was pretty similar

Procrastinator333

IveSeenTheLight wrote: »

Not true.
Look at the trend line on the linked data from 2007
http://www.nationwide.co.uk/hpi/historical/Jul_2007.pdf

prices were above but the long term trend was pretty similar

I think you miss my point. 2007 is irrelevant to the point I'm making.

If you cut the data at Q1 1990 and plot a trend line with the data from the start to that date, the trend line would be above where it sits as we look at the data now.

Graham_Devon

IveSeenTheLight wrote: »

Can you remember why it is curved?
It's because it's compounded.

Imagine you have £100 in a bank earning 3% nett interest.
After year one you have £3 interest so £103.
The next year you have £3.09 interest so £106.09
The next year you have £3.27 interest so £109.27
and so on.
Each year hase the same interest 3% (or 2.9% in the case of house prices, yet the compound effect means you earn more in monetry terms, thus you get a curved line.

Here's the £100 3% yearly interest in graph form
See the curved line due to compound interest.
It doesn;t deter that the average yearly interest was 3%

Good lord. I have never seen something so desperate.

Of course it curves. Thats my whole point. The trend line moves wth house price movements.

If they go up 200% for a total of 5 years, the trend line will be pulled up massively, even over 50 years data.

Therefore, the trend line is skewed, when you try to use it to say "look, this is normal".

DervProf

HAMISH_MCTAVISH wrote: »

But in a market where a massive and long term housing shortage exists, with rising population, record low housebuilding, insecure tenancy laws, expensive rents, and a proven tendency for supply to shrink whenever prices fall, you have to admit the conditions here are pretty far from ideal for a great big housing crash.

I`d say that`s pretty bad.

Why would anyone support/celebrate those conditions ?