London property falling by 72% a year!

FTBFun

Hmmmm

Where I used to live (NW3) 1 bed flats would be around £250,000 if you were lucky. Does that mean I can now get one for £70,000? I think not.

Ridiculous thread this.

Graham_Devon

Linton wrote: »

Bear maths is as convincing as their arguments!!!
:rotfl::rotfl::rotfl::rotfl:

Let me explain it carefully step by step so you dont get it wrong next time

1) After 1q the house is worth 100K * 0.82
(0.82 is 1-0.18)
2) After 2q the house is worth 100K * 0.82 *0.82
3) After 3q the house is worth 100K * 0.82 * 0.82 * 0.82
4) After 4q the house is worth 100k * 0.82 * 0.82 * 0.82 * 0.82

Which equals 45.2K.

What you got wrong is to assume the 18% is of the initial value. Its not, its 18% of the current value.

If you were right, after 6q the house would have a negative price.

Please Sir! I'm confused

Not only about the maths, but about this whole thread

Pete111

macaque wrote: »

Basis of calculation - £100k

d£/dѲ = - £18k/q

4 X £18/q = - £72K

72/100 = - 72%

Notes to 70% admin
1. If there are any places left on our basic arithmatic outreach programme, please could you send a leaflet to julieq
2. I have been greatly impressed with Dirk Rambo's thoughtful analysis. Please have the membership committee review his membership status (upgrade from member to fellow?)

Oh dear Monkey boy. Linton has just debunked your fairly obviously flawed 'calculation' rather comprehensively.....

JulieQ - please do ensure you post the contents of the 70% club maths leaflet when it comes through. Should be good for a few pages of mirth.

Doctor_Gloom

When you factor in the collapse of the pound sterling, house prices have fallen much more than the government lies and statistics might have you believe. macaque isn't far off the mark imho.

System

Doctor_Gloom wrote: »

When you factor in the collapse of the pound sterling, house prices have fallen much more than the government lies and statistics might have you believe. macaque isn't far off the mark imho.

Unless you get your salary paid in another currency, you wouldn't factor it in.

Unless you were a bit of a plank.

bendix

macaque wrote: »

Basis of calculation - £100k

d£/dѲ = - £18k/q

4 X £18/q = - £72K

72/100 = - 72%

Notes to 70% admin
1. If there are any places left on our basic arithmatic outreach programme, please could you send a leaflet to julieq
2. I have been greatly impressed with Dirk Rambo's thoughtful analysis. Please have the membership committee review his membership status (upgrade from member to fellow?)

Let's do it properly this time:

House is worth £100,000 on 1 Jan.

Q1 it falls 18% or £18,000 to be worth £82,000 on 1 April
Q2 it falls 18% or £14,760 to be worth £67,240 on 1 June
Q3 it falls 18% or £12,103 to be worth £55,137 on 1 Sept
Q4 it falls 18% or £9,924 to be worth £45,213 on 1 Jan

Which - over the year - equates to a fall of around 55%, not 72%.

julieq

Actually Dr Gloom, I did point that out a year or two back. In absolute value terms we're not far away from the level of crash that was predicted, which is why we were never likely to see the levels of nominal price reduction the bears were expecting. As usual they were looking only at one part of a complex interlinked global financial system.

Incidentally the pound hasn't collapsed. And obviously if you call statistics "government lies" in one direction, they're equally unreliable in the other, although since the methodology is published and the figures are produced in a verifiable way to inform policy rather than to shape public opinion, I'm happy enough to accept them.

Generali

bendix wrote: »

Let's do it properly this time:

House is worth £100,000 on 1 Jan.

Q1 it falls 18% or £18,000 to be worth £82,000 on 1 April
Q2 it falls 18% or £14,760 to be worth £67,240 on 1 June
Q3 it falls 18% or £12,103 to be worth £55,137 on 1 Sept
Q4 it falls 18% or £9,924 to be worth £45,213 on 1 Jan

Which - over the year - equates to a fall of around 55%, not 72%.

To be fair, pretty much nobody understands compound interest.

Even most of the people that apparently understand compound interest don't actually understand it. Hence the confusion surrounding the reason why people that are 50 have more wealth than those aged 30.

macaque_2

bendix wrote: »

Let's do it properly this time:

House is worth £100,000 on 1 Jan.

Q1 it falls 18% or £18,000 to be worth £82,000 on 1 April
Q2 it falls 18% or £14,760 to be worth £67,240 on 1 June
Q3 it falls 18% or £12,103 to be worth £55,137 on 1 Sept
Q4 it falls 18% or £9,924 to be worth £45,213 on 1 Jan

Which - over the year - equates to a fall of around 55%, not 72%.

Er .....wrong! If the rate of fall is £18k/q then the % falls in subsequent months will get progressively larger

System

So is every property falling by 18k a quarter then?

So when you say 72% in your OP, you only mean properties valued at 100k exactly? What about more expensive properties or cheaper ones?

In your defence, one of your better arguments.