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Debate House Prices
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70% club does it again
Comments
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https://forums.moneysavingexpert.com/discussion/2853236
Here we go:
How prices rise for the sixth month in row? Oh come on! Even the most froth laden bulls will have to admit that this is complete tosh. How do they come up with this rubbish? The way they con the punters lies in the forumla they use for calculating house price rises which is:
A = T/N
Where
A = average house price
T = total value of house price sales
N = number of houses sold
This formula is almost guaranteed to give the illusion of house price rises at the start of a crash. The first casualties in a house price crash are the cheaper properties. When people stop buying cheaper properties T/N rises even though all house prices are falling. In other words they are not comparing like samples with like.
The material for this news item came from:
You need to read how the Land Registry calculate their house price indices. Your formula (and all resulting arguments and conclusions) is completely and utterly wrong.
Look up what "mix adjusted" is and where it's used.0 -
They have knowingly passed off poor quality debt in the form of A grade CDO's.
It was the structure of the CDOs that was meant to make them AAA grade, not the debt that went in. I should do a post or blog or something on CDO structures. It's a fascinating subject in it's own right or at least it is to me.They have used tax payers money to pay bonuses to the very people that brought the economy to the brink of ruin. They are organisations with more than their fair share of greedy, selfish and thoroughly dishonest people. Such people are hardly going to be sqeemish about massaging statistics, especially when the very survival of their business relies on keeping house prices up whilst they deleverage.
As for the stats corrolating, well that just does not hold water. In some months, we see one group reporting rising prices whilst another reports falling prices. If their answer to this is that their results are based on long term moving averages that is just a weazel form of corruption and spin. It is like selling rotten fish and claiming that the fish are fresh on the basis of long term moving averages. Such practices are extremely missleading and can cause serious damage to would be home buyers.
As to the rest, fair enough really. I don't really agree but I can see where you're coming from.0 -
You need to read how the Land Registry calculate their house price indices. Your formula (and all resulting arguments and conclusions) is completely and utterly wrong.
Look up what "mix adjusted" is and where it's used.
The Land Registry doesn't use mix adjustment, it compares the price the last time a house was sold with the price it was sold at this time. That's why they can't include new builds in the index.0 -
The Land Registry doesn't use mix adjustment, it compares the price the last time a house was sold with the price it was sold at this time. That's why they can't include new builds in the index.
Yes, the Land Registry use different methods to the Halifax and Nationwide, that's why I was suggesting to our simian friend that he needs to look up both methods, as neither corresponds with his grossly oversimplified idea.0 -
Yes, the Land Registry use different methods to the Halifax and Nationwide, that's why I was suggesting to our simian friend that he needs to look up both methods, as neither corresponds with his grossly oversimplified idea.
Where 'grossly oversimplified' delivers the necessary spin, you can be sure that some of the financial organisations will be using it. When house prices are falling, lenders resort to averaged stats. When those stop working they invite a research companies to write a puff piece on how house prices are set to 'double over the next 5 years'.
There seems to be no lower limit to the depths of deception that large financial organisations will employ to delude the public; endowments, pensions, unit trusts, bank charges, high interest accounts that drop to zero without warning etc. It just goes on year after year. Bottom line? They are a bunch of lying thieves who are not being properly regulated. Just look how many loopholes they found after they were forced to quote APR.
You might froth at the inference of 'grossly oversimplified' but 'grossly oversimplified' is exactly how financial organisations dupe the public.0 -
You might froth at the inference of 'grossly oversimplified' but 'grossly oversimplified' is exactly how financial organisations dupe the public.
As an industry insider, I find much of what goes on to be pretty shocking.
Because of the fee structure, which is always grossly oversimplified, it is pretty normal for $100 in super* contributions to increase the pension pot by just $80 if you use a non-mutual provider. That is before the money gets invested by the Investment Manager and so commissions get paid to brokers and so on.
It is hard to think of another group of companies except cigarette manufacturers that act so directly to disadvantage their own customers deliberately.
*Aussie version of a pension0 -
Not sure I agree re flat at the moment - yes yoy but that is composed of an increase followed by a (possibly accelerating) decline.
Also as volumes decline the data seems to be getting increasingly 'noisy' as stats theory would suggest.
CDOs
CDOs seem to make a lot of sense to me - barely a day goes past without discussion of the higher rates suffered by those without a 40% deposit - in effect a mortgage rate is blended rate - the first 50% of the lenders advance is probably extremely low risk ('AAA'?) and should incur a very low rate, the next tranche is then a bit more risky and should have a risk premia added to the rate and so on.
As an example if a 60% mortgage costs 2% over base and a 90% 5% over base it would suggest that the actual effective rate for the 60 to 90% tranche is 11% so a risk premia of 9% which suggests that either the mortgage companies are over-pricing risk or there are going to be some fairly hefty losses in the market.
Just a shame the models of likely loss probabilities they applied to US mortgage CDOs were so wrong.I think....0 -
Where 'grossly oversimplified' delivers the necessary spin, you can be sure that some of the financial organisations will be using it. When house prices are falling, lenders resort to averaged stats.
Which lenders? People tend to quote the Halifax and/or Nationwide stats, both mix adjusted at all times.
No other lenders have the numbers to compile reliable stats by any method.0 -
THE_GHOULS_PARADISE wrote: »The stastics they used is correct. Just go and do your own research on the street level. House prices have stabilized and are now rising exponentially as cash rich ftb snap up the bargains. Miss out and forever pay someone elses mortgage.
absolute blatant propaganda and lies again.0 -
Quel suprise, on a day when asking prices started to plunge
http://swns.com/rural-house-prices-rise-96-per-cent-151546.html
Rural house prices rise 96 per cent
Small print
House prices in the countryside have risen by £200 a week over the past ten years0
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