House price trends

macaque_2

How many people find solace in the little red line in the graph below.

"Don't worry Vanessa, house prices have dipped a little but they will stop when they hit the red line. The government controls the trend line so our portfolio is safe". "Phew, thanks Jeremy for putting my mind at rest, you know the portfolio is more precious to me than the children"

Friends, I have some shocking news. It turns out that the red trend line is in cahoots with the blue one and has been following it at a distance. When the blue line falls below the red line, this is usually a signal for higher public spending and loose money (hence why some people think the government controls the red line).

Unfortunately, this time, there are no 'get out of jail free cards' left. The government has run out of cash and the banks are loaded with toxic debt. So my message to Jeremy and Vanessa is that they are right. House prices will revert to trend at some point but, not a trend as they would know it.




This has been a public service announcement by the 70% club

StevieJ

If we wait any longer the red line will be joining the blue line not the other way round

andykn

I thought this was a post from 2007, the last date on the graph. haven't prices reverted to trend already and gone back up?

And isn't public spending due to increase despite all the rhetoric?

RenovationMan

StevieJ wrote: »

If we wait any longer the red line will be joining the blue line not the other way round

If it hasnt already. That graph timescale ended in 2007, so the red line may well be higher than the blue now. OMG, does that mean we are in a new housing boom?

Quick everyone, get on the ship before it sails!!

Loughton_Monkey

Since this data comes from an organisation billed as "The campaign for affordable house prices" it is no wonder that it makes no sense.

A graph of house prices is valid - albeit 'old hat' - since we have all seen one. A graph of house prices only up to 2007 only serves to tell us that either (a) the people presenting it are mathematical/statistical morons or (b) have deliberately chosen to stop the graph at 2007 to make some false point or other.

If in any way you are in touch with these people, you might just give them a tip. If they are going to publish nonsense, then it is far better to present complete nonsense.

The concept of any government 'controlling' a trend line is itself ignorant in the extreme. A trend line is not and cannot realistically be 'controlled' by anyone, since it is a mathematical function of the underlying data. Yes. In concept, a government could control the 'underlying data' but not the 'trend line' directly. In any case, Governments probably do use some form of data to decide if/when to increase public spending. If they do, then house prices would be about 99th on the list.

Just as an aside, I would say that if house prices were 'unaffordable' then it seems remarkable that so many have actually been 'afforded'. And as many would point out, they have virtually never been so 'affordable' as they are now with the low interest rates and the recent fall in prices. So what's next? A campaign to ensure that the Ursine species defecates in forestry areas?

tyllwyd

I just found the up to date version of this graph (sorry, don't know how to post the image on its own but it's on the last page of this press release).
http://www.nationwide.co.uk/hpi/historical/Jan_2011.pdf

IronWolf

Such trends are heavily influenced by bull markets. If you'd drawn a trendline of the FTSE 100 in 2002 you would have been horribly wrong in your predictions.

Real life is more complicated than straight lines.

ultrawomble

tyllwyd wrote: »

I just found the up to date version of this graph (sorry, don't know how to post the image on its own but it's on the last page of this press release).
http://www.nationwide.co.uk/hpi/historical/Jan_2011.pdf

I've extracted it from the PDF:

leitmotif

Trend lines are not static; they shift as the data changes. The trend line has been pulled sharply upwards by a protracted period of easy credit and willing overborrowers. It represents, if you will, the gleeful 'credit erection' of the dumb debt-hungry Brit. Low interest rates constitute the Viagra-like palliative, still in the blood long after the party's over. The BOE is out of medicine, and the future looks slightly more flaccid - a semi at best.