December Nationwide MoM +0.4%

setmefree2

http://www.nationwide.co.uk/hpi/historical/Dec_2010.pdf

http://www.nationwide.co.uk/hpi/historical/Q4_2010.pdf

House prices edge higher at end of 2010

• House prices rose by a modest 0.4% in December

spring bounce anyone?

setmefree2

Northern Ireland was the worst performing region for
the third year running, with prices down 8.9% year-onyear,
slightly worse than the 6.7% fall seen in 2009.
Average prices in the province are down a remarkable
45% from their 2007 peak

Ouuch! :eek::eek::eek:

Generali

Generali on the monthly figures:

- Nationwide uses seasonally adjusted numbers. Non-seasonally adjusted average nominal prices for the month are down -0.4%
- Nationwide's preferred metric for measuring house price changes is to compare the average of the last three months with the average of the previous 3 months. This is down -1.0%, up from a fall of -1.3% last month, ie smoothed house price falls are slowing.
- Nationwide's average nominal house price is down -4.3% since the latest peak price in June 2010.
- Nationwide's average nominal house price is down-12.5% since the all time peak in October 2007
- Using the RPI, inflation has been 8.6% October 2007 (CHAW dataset) so the current average house price in October 2007 pounds is £149,873*
- Using the above calculation, real (inflation adjusted) house prices are down 19.4% from peak.
- Monthly figures are just noise

I'll look at the quarterly numbers later.




*I am happy to be corrected on this as I always get a bit confused with adjusting for inflation: I divided the current price by 1.086 to turn it into October 2007 money.

HAMISH_MCTAVISH

heh heh heh.......

Saynowt

Generali wrote: »

*I am happy to be corrected on this as I always get a bit confused with adjusting for inflation: I divided the current price by 1.086 to turn it into October 2007 money.

If that method is correct it's worthwhile pointing out that anyone who borrowed, say £200,000 in October 2007, has effectively had their debt reduced to £184,162 in 'real' terms.

Generali

Saynowt wrote: »

If that method is correct it's worthwhile pointing out that anyone who borrowed, say £200,000 in October 2007, has effectively had their debt reduced to £184,162 in 'real' terms.

Absolutely right, it cuts both ways.

Usually, inflation isn't much help to borrowers because while the principal sum is eroded in value, the cost of servicing the debt rises. That effectively means you pay back more than you planned today and less tomorrow. It doesn't cut what you repay, it just moves the timetable around.

However, unusually, mortgage rates are at or below inflation so while the value of the debt is being eroded, the cost of servicing the debt has fallen. It's why people with debt tied to the base rate but incomes tied to inflation are making out like bandits.

chucky

setmefree2 wrote: »

House prices edge higher at end of 2010

it's the next leg down... pmsl...

Generali

chucky wrote: »

it's the next leg down... pmsl...

To be fair, you've got to be spinning better than Swann to make this into positive news.

I think the market will stay approximately flat but there are signs that it is starting to fall again in real terms. If inflation drops back then that might translate into bigger nominal falls.

Brits seem not to mind losing money to inflation but hate losing nominal cash. It's probably the same everywhere.

chucky

Generali wrote: »

- Using the RPI, inflation has been 8.6% October 2007 (CHAW dataset) so the current average house price in October 2007 pounds is £149,873*
- Using the above calculation, real (inflation adjusted) house prices are down 19.4% from peak.

close Gen, very close

it also which means that house prices are lower than the long term average trend for house prices that kills the argument that houses have risen more than inflation

    House Price    Real' House Price    Trend in 'Real' House Prices
2007 Q1    £175,554    £196,203        £150,936
2007 Q2    £181,810    £199,945        £152,011
2007 Q3    £184,131    £201,715        £153,095
2007 Q4    £183,959    £198,933        £154,185
2008 Q1    £179,363    £192,769        £155,284
2008 Q2    £174,514    £183,899        £156,390
2008 Q3    £165,188    £172,390        £157,505
2008 Q4    £156,828    £165,107        £158,627
2009 Q1    £149,709    £161,051        £159,757
2009 Q2    £154,066    £164,413        £160,896
2009 Q3    £160,159    £169,479        £162,042
2009 Q4    £162,116    £169,573        £163,197
2010 Q1    £162,887    £168,515        £164,359
2010 Q2    £168,719    £171,269        £165,531
2010 Q3    £167,354    £169,126        £166,710
2010 Q4    £163,244    £163,244        £167,898

Generali wrote: »

To be fair, you've got to be spinning better than Swann to make this into positive news.

100% agree, each month that passes shows that these 20%25% falls that are promised aren't happening.

Generali

chucky wrote: »

it also which means that they are lower than the long term average trend for house prices.

True.

Time will tell whether prices will revert to mean or not. They have in the past.

abaxas

£163,244 / 1 = £163,244