Housepricecrash.co.uk graph is an optical illusion

Generali

Still half a big fat Everest on the right of the graph. Doesn't prove house prices will crash of course.

mr.broderick

Excellent thread, i wonder just how much the changes in lending criteria have contributed to this massive growth...affordability, 5x income etc..I do believe we would have got to where we are today anyway just not so quickly, this always leaves the market open for a correction, how big i dont know. I am currently pondering entering the market again having sold my property last year, in the back of my mind there is a nagging doubt about buying now, if enough buyers have this doubt and it gets stronger, there could be a correction.

Generali

mr.broderick wrote:

Excellent thread, i wonder just how much the changes in lending criteria have contributed to this massive growth...affordability, 5x income etc

My feelings are that it was excess liquidity that set us off along this path and that the egregious 5x income mortgages, BTL empires based on credit card borrowing and remortgaging and property !!!!!! on the TV and in the papers are the symptoms of the bubble not the causes.

mr.broderick wrote:

this always leaves the market open for a correction, how big i dont know. I am currently pondering entering the market again having sold my property last year, in the back of my mind there is a nagging doubt about buying now, if enough buyers have this doubt and it gets stronger, there could be a correction.

If the stock market sell-off marks the start of a bear market, it won't be long before the unemployment beast stalks the land. If that happens then you'll almost certainly see the down side of the Everest on that graph.

The BTL thing may change things a little - I can't work out if it's going to exaccerbate falls or soften them. I suspect the former but live in hope of the latter.

jaype

zar wrote:

If you want to recreate that graph, go to " rel="nofollow">

That red trend line is £126k for Q4 2006, with the actual price £172k. But all this may mean is that exponential growth is a pretty rubbish model for real house prices.

didn't the OECD say that prices in the Uk were about 30 per cent above sustainable levels? Sounds about right, then...

zag2me

No-one seriously gets 5x mortgages, you need a massive deposit and have to earn silly wages to qualify for the products.

Most people are still buying for around 3-3.5x their salary's as far as I'm aware.

The graph on the hpc website clearly has been updated and now shows stagnation, we just have to wait for inflation and wages to catch up now.

jaype

zag2me wrote:

No-one seriously gets 5x mortgages, you need a massive deposit and have to earn silly wages to qualify for the products.

Most people are still buying for around 3-3.5x their salary's as far as I'm aware.

.

Really? Try putting your salary into the calculator on the Abbey or Halifax websites and you could be in for a surprise. And then there's the rise in self cert mortgages to factor in. Just look elsewhere on this board, too, if you want to see lots of examples of people hoping to borrow six or even more times their income (and thankfully being gently slapped down by more sensible members of the community)

Generali

jaype wrote:

borrow six or even more times their income (and thankfully being gently slapped down by more sensible members of the community)

These requests (and even more so the BTL enquiries from 18 year olds with no deposit and a £11.5k p.a. income) always remind me of the famous story about the shoe shine boy asking Rothschild for stock tips in 1929. He went into work and sold everything, or at least so the story goes, just before The Crash.