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Debate House Prices


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The absolute fallacy of the average bull argument.

geneer
geneer Posts: 4,220 Forumite
edited 13 February 2011 at 7:55PM in Debate House Prices & the Economy
Pun absolutely intended in the title by the way.

So, in the last crash average house prices fall around £10K, in nominal terms.
Doesn't seem so bad. Yet the reality is that this was widely regarded as a House Price Crash.
That in many areas homeowners found themselves in significant negative equity or losing their homes (far in excess of the average loss).
The answer of course is obvious. Global average statistics are blunt and highly liable to skewing.
Break the markets down, and a very different picture will present itself.

For example, in Edinburgh we've seen apparent increases in average house price (one silly boy gloated NEW PEAK!) yet it transpired that
the averages were being skewed by a combination of low volumes, and the continued sales of "money no object" half million pound town houses.
In fact, we've learned, YOY most property types in Edinburgh fell up to 5% during 2010.

Aberdeen is a similar case. Another "NEW PEAK WOO HOO!". Yet dig a little deeper, and we see that city centre properties actually saw significant falls at the time.

You would have thought this observation is obvious. But apparently it needs repeating.
Because how many times has some silly boy stated that "theres been no crash to speak of".

Or how many times has someone ignorantly asserted that the price of their house has gone up actually because the average price for their town, their region, or their country, has increased. Twaddle.

So heres the big secret:-

Averages prices are based on, y'know, an average.
It can be made up of lots of smaller averages.
There is no such thing as the average house.

So "no crash to speak of" because the headline figure doesn't seem that bad. Get a grip bulls.

Didn't wash during the 90's crash.
Won't was now.
Simples.
«134567

Comments

  • the_flying_pig
    the_flying_pig Posts: 2,349 Forumite
    edited 13 February 2011 at 7:52PM
    geneer wrote: »
    ...Averages prices are based on, y'know, an average....

    yeah, it's pathetic really.

    the average fall from peak is about 10%. it's an average. an example of an average fall of 10% would be:

    (1) half of all property falling by 10%;
    (2) a sixth of all property staying the same;
    (3) a sixth of all property rising by 10%;
    (4) a sixth of all property falling by 40%.

    this gives you an average of -10%

    retards like Hamish attempt to spin an average fall of 10% as a tiny handful of about seven soon-to-be demolished crumbling inner city hovels falling by 10% and everything else staying the same or SOARING. a mathematically challenging theory.

    they're not worthy of the term "bull", conjuring, as it does, images of skilled, educated, wall street types... they're just... ageing, largely uneducated, clowns who want to believe that pwoperdee can be a magic money tree for their pension & who'll choke up any old kidney stones of nonsensical pseudo-wisdom to try and persuade others that this is what will happen.
    FACT.
  • geneer
    geneer Posts: 4,220 Forumite
    yeah, it's pathetic really.

    the average fall from peak is about 10%. it's an average. an example of an average fall of 10% would be:

    (1) half of all property falling by 10%;
    (2) a sixth of all property staying the same;
    (3) a sixth of all property rising by 10%;
    (4) a sixth of all property falling by 40%.

    this gives you an average of -10%

    retards like Hamish attempt to spin an average fall of 10% as a tiny handful of about seven soon-to-be demolished crumbling inner city hovels falling by 10% and everything else staying the same or SOARING. a mathematically challenging theory.

    they're not worthy of the term "bull", conjuring, as it does, images of skilled, educated, wall street types... they're just... ageing, largely uneducated, clowns who want to believe that pwoperdee can be a magic money tree for their pension & who'll choke up any old kidney stones of nonsensical pseudo-wisdom to try and persuade others that this is what will happen.

    Indeed. Yet 99% of the bulls current "arguments" seem to rely on the cross-eyed drooling assertion that the term "average" has a deeper inherent meaning than it actually. In otherwords [EMAIL="statw@nk"]statw@nk[/EMAIL].

    Lets ignore context, lets ignore analysis. Lets forget the fact that this discredited argument is hilariously counter-intuitive, think the bulls.

    Heres the appropriate response.
    "Nah. Sorry chaps. Lets not." ;)
  • Londonsu
    Londonsu Posts: 1,391 Forumite
    geneer wrote: »
    Pun absolutely intended in the title by the way.

    So, in the last crash average house prices fall around £10K, in nominal terms.
    Doesn't seem so bad. Yet the reality is that this was widely regarded as a House Price Crash.
    That in many areas homeowners found themselves in significant negative equity or losing their homes (far in excess of the average loss).
    The answer of course is obvious. Global average statistics are blunt and highly liable to skewing.
    Break the markets down, and a very different picture will present itself.

    For example, in Edinburgh we've seen apparent increases in average house price (one silly boy gloated NEW PEAK!) yet it transpired that
    the averages were being skewed by a combination of low volumes, and the continued sales of "money no object" half million pound town houses.
    In fact, we've learned, YOY most property types in Edinburgh fell up to 5% during 2010.

    Aberdeen is a similar case. Another "NEW PEAK WOO HOO!". Yet dig a little deeper, and we see that city centre properties actually saw significant falls at the time.

    You would have thought this observation is obvious. But apparently it needs repeating.
    Because how many times has some silly boy stated that "theres been no crash to speak of".

    Or how many times has someone ignorantly asserted that the price of their house has gone up actually because the average price for their town, their region, or their country, has increased. Twaddle.

    So heres the big secret:-

    Averages prices are based on, y'know, an average.
    It can be made up of lots of smaller averages.
    There is no such thing as the average house.

    So "no crash to speak of" because the headline figure doesn't seem that bad. Get a grip bulls.

    Didn't wash during the 90's crash.
    Won't was now.
    Simples.

    I WAS going to read your post but before I did I noted that you had signed off with SIMPLES

    Sorry any post that ends with a quote from a rubbish ad with stupid meerkats aint worth my time bothering about
  • geneer wrote: »
    Aberdeen is a similar case. Another "NEW PEAK WOO HOO!". Yet dig a little deeper, and we see that city centre properties actually saw significant falls at the time.
    .

    Except of course, that they didn't....

    The average price of city centre flats on one index only reduced, but it's based on just a few dozen properties with a price range from 80K to 200K..... Such a small sample can indeed be skewed by a change in the sales mix, as you point out.

    When you dig a little deeper, and use the larger sample size RoS breakdown of properties by type, it turns out that all property types rose, flats, terraced, semi, and detached.

    When you dig even deeper, and look at individual properties that sold in 2006/2007 that sold again in 2010, all the ones I've seen have sold for a similar price or more in 2010 as they did in 2006/7.

    A few examples.....

    162, Forest Avenue, Aberdeen, AB15 4UN
    -Dec-2009 £280,000
    Dec-2006 £255,500

    98, Union Grove, Aberdeen, AB10 6SA
    Jun-2010 £130,000
    Apr-2007 £91,500

    305, Union Grove, Aberdeen, AB10 6TD
    May-2010 £121,121
    Oct-2007 £115,000

    57, Chapel Street, Aberdeen, AB10 1SS
    Jun-2010 £170,000
    Mar-2007 £156,777

    58e, Chapel Street, Aberdeen, AB10 1SN
    Jun-2010 £145,000
    Aug-2006 £110,000

    398, King Street, Aberdeen, AB24 3BY
    Jun-2010 £125,000
    Dec-2007 £124,000

    394, King Street, Aberdeen, AB24 3BQ
    May-2010 £132,500
    Oct-2007 £130,501

    Now it doesn't get much more "city centre" in Aberdeen than Chapel street, King street, etc, yet here we have evidence of city centre flats selling for more in 2010 than they did in 2007.

    So to summarise....

    Blunt average = UP

    Breakdown by property types = UP (for all types)

    Individual house sales = UP

    I think we're done here.....
    “The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.

    Belief in myths allows the comfort of opinion without the discomfort of thought.”

    -- President John F. Kennedy”
  • LisbonLaura
    LisbonLaura Posts: 1,121 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker

    Blunt average = UP

    Breakdown by property types = UP (for all types)

    Individual house sales = UP

    I think we're done here
    .....

    Except for the difference between nominal & real, which (sans surprise) rarely gets a mention on here.
  • Rinoa
    Rinoa Posts: 2,701 Forumite

    So to summarise....

    Blunt average = UP

    Breakdown by property types = UP (for all types)

    Individual house sales = UP

    I think we're done here.....

    Indeed.

    But I guess when you're:

    [FONT=&quot]rolleyes%5E_%5Etahoma%5E_%5E2%5E_%5E1%5E_%5EMinus%20%C2%A340k%20since%20joining%20HPC%5E_%5E.gif

    ...you 'll resort to any tactic in masking the relentless truth of your situation. :rotfl:
    [/FONT]
    If I don't reply to your post,
    you're probably on my ignore list.
  • Except for the difference between nominal & real, which (sans surprise) rarely gets a mention on here.

    Except of course, in the threads specifically discussing the difference between nominal and real house prices.

    Like this one.

    https://forums.moneysavingexpert.com/discussion/2544505
    “The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.

    Belief in myths allows the comfort of opinion without the discomfort of thought.”

    -- President John F. Kennedy”
  • Rinoa wrote: »
    Indeed.

    But I guess when you're:

    [FONT=&quot]rolleyes%5E_%5Etahoma%5E_%5E2%5E_%5E1%5E_%5EMinus%20%C2%A340k%20since%20joining%20HPC%5E_%5E.gif

    ...you 'll resort to any tactic in masking the relentless truth of your situation. :rotfl:
    [/FONT]

    :rotfl:

    And the rest...... Unless geneer lives in mummy's spare bedroom. ;)
    “The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.

    Belief in myths allows the comfort of opinion without the discomfort of thought.”

    -- President John F. Kennedy”
  • Graham_Devon
    Graham_Devon Posts: 58,560 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    edited 13 February 2011 at 10:03PM
    Rinoa wrote: »
    Indeed.

    But I guess when you're:

    [FONT=&quot]rolleyes%5E_%5Etahoma%5E_%5E2%5E_%5E1%5E_%5EMinus%20%C2%A340k%20since%20joining%20HPC%5E_%5E.gif[/FONT]

    [FONT=&quot]...you 'll resort to any tactic in masking the relentless truth of your situation. :rotfl: [/FONT]

    I don't mean to pee all over your parade, but how is he actually 40k down, considering he hasn't bought (therefore has the same capital) and has saved (therefore has more).

    Even if you are taking into account the price rise from the absolute bottom, a 40k, complete paper loss is a pretty hefty guesstimate, stating the average property has risen approx a whopping 25% since 2009. However, you tell him he shouldn't have an average property, just a cupboard making out it's actually a starter flat. That's an even heftier percentage increase. On the average starter home at 110k, we'd have seen approx 35% gain to see a paper loss of 40k.

    I guess you didn't actually think of any of this though, when you saw a pretty icon you could type your own hilarious wording into?

    Got a thanks from Hamish though....and I'm sure you'll get another 5 thanks from another poster.
  • Rinoa
    Rinoa Posts: 2,701 Forumite
    :rotfl:

    And the rest...... Unless geneer lives in mummy's spare bedroom. ;)

    Indeed, when you add on 5 years rent it's:

    laugh%5E_%5Etahoma%5E_%5E2%5E_%5E1%5E_%5EMinus%20%C2%A340k%20since%20joining%20HPC%5E_%5E.gif


    ...plus a further £30k or so. ;)
    If I don't reply to your post,
    you're probably on my ignore list.
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