Nominal price falls are the same as the last crash. Discuss.

IveSeenTheLight

geneer wrote: »

1) Are nominal falls similar to what they were during the 90's crash?

2) If they are, is it not fair and absolutely correct to describe the 2008/2009 fall as a crash (as the media, the politicians, the pundits and economists have).

1) Nominal falls were greater in the 2008 correction when compared to the 90's correction.

According to Halifax (Sorry LR data only appears to go back to 1995 for comparison purposes), the 2008 correction dropped the average house price

In the 90's correction, they peaked at £70,588 (July 89) and troughed at £60,196 (Feb 93), representing a £10,392 reduction or 14.7% decrease in price

In the 2008 correction, they peaked at £201,081 (Aug 07) and troughed at £157,066 (Mar 09) representing a £43,925 reduction or 21.8% decrease in price

So we can see that this correction is indeed greater both nominally and as a percentage than in the 90's.
If people are making a direct comparison, wouldn't it therefore equate that they should be expecting rises similar to what happened in the 90's.

[Tongue_In_Cheek]What's holding prices back from increasing? Some would say mortgage rationing is dampening the effective demand and that this could be related to holding back a dam . Sooner or later, it will overflow. [/Tongue_In_Cheek]

2) I'm not interested in subjective termoniology. I call both periods house price corrections.
The times we are discussing they corrected from being above the long term trend, similarly in other period, the correction saw them increasing back to that long term trend after they had over corrected.

geneer

wotsthat wrote: »

1) You've complained about people making assertions and then simply done the same thing.

Of course I know the answers already Wotsthat. So your claim is incorrect.

wotsthat wrote: »

2) In an earlier thread I was happy to call it a crash as I know that's the language you like to use. In the real world I think I would be seen as overly dramatic if I went around talking about the great housing crash of 2008. I'm not sure it really matters what you call it though - does it really matter?

Though of course if nominal falls were as bad as they were in the 90's, it would seem that "CRASH" is exactly the right terminology.

Now...., back to the falls. Are they indeed similar?

geneer

IveSeenTheLight wrote: »

1) Nominal falls were greater in the 2008 correction when compared to the 90's correction.

According to Halifax (Sorry LR data only appears to go back to 1995 for comparison purposes), the 2008 correction dropped the average house price

In the 90's correction, they peaked at £70,588 (July 89) and troughed at £60,196 (Feb 93), representing a £10,392 reduction or 14.7% decrease in price

In the 2008 correction, they peaked at £201,081 (Aug 07) and troughed at £157,066 (Mar 09) representing a £43,925 reduction or 21.8% decrease in price

So we can see that this correction is indeed greater both nominally and as a percentage than in the 90's.
If people are making a direct comparison, wouldn't it therefore equate that they should be expecting rises similar to what happened in the 90's.

[Tongue_In_Cheek]What's holding prices back from increasing? Some would say mortgage rationing is dampening the effective demand and that this could be related to holding back a dam . Sooner or later, it will overflow. [/Tongue_In_Cheek]

2) I'm not interested in subjective termoniology. I call both periods house price corrections.
The times we are discussing they corrected from being above the long term trend, similarly in other period, the correction saw them increasing back to that long term trend after they had over corrected.

Very good light full marks for the base facts.

C- for the predictive analysis.

F for when you claim you're not interested in subjective terminology, before demonstrating that you subjectively decided to call both periods "house price corrections".

Of course if it was a Crash then its a Crash now.
And as I recall the bulls used to be quite happy to call the 90's crash a crash. Whats changed I wonder?

And more importantly if the 90's crash was generally regarded as being very bad for many home owners, it would seem that the assertion that "most people in most places have not seen house price falls" would appear to be bobbins too.

Cleaver

I've got to be honest and say that I can't remember whether geener thinks it wasn't a crash and Hamish thinks it was, or vice versa. And which one thinks the 90s one was and which doesn't. Anyone enlighten me?

HAMISH_MCTAVISH

I have no idea what he's rabbiting on about, to be honest.

geneer

HAMISH_MCTAVISH wrote: »

I have no idea what he's rabbiting on about, to be honest.

Funny. You seemed to know when you posted this.

Originally Posted by HAMISH_MCTAVISH
Nominal falls for most of the UK are now around half what they were in the 90's crash, after the immensely sharper recovery than was experienced in the 90's.

Of course I understand you forgetting. You did after all forget to return to the thread once your assertions were compared to the facts.

As light has confirmed, it turns out your assertions are quite wrong.

I'm glad thats settled. You are of course an honest and open poster. I'm sure that now you realise your error you won't continue to regurgitate the discredited assertion in future.

HAMISH_MCTAVISH

geneer wrote: »

it turns out your assertions are quite wrong.
.

Not at all.

Nationwide has prices at 10% below peak.

But at the same time into the last crash it was closer to 20% than 10%.

Hence, your comment "Nominal falls are already greater than the 90's crash" is a lie.

geneer

HAMISH_MCTAVISH wrote: »

Not at all.

Nationwide has prices at 10% below peak.

But at the same time into the last crash it was closer to 20% than 10%.

Hence, your comment "Nominal falls are already greater than the 90's crash" is a lie.

But nationwide aren't the only statistical figures Hamish.
And you have been made quite aware of that, although previously chose not to discuss it further.
http://forums.moneysavingexpert.com/showpost.php?p=47816363&postcount=90

Perhaps you could enlighten the forum as to why that would be the case.

geneer

The stats if full.

According to Halifax house prices fell 13% nominally in the 90’s.
Currently, according to Halifax, house prices have fallen by nearly 20%.

According to Nationwide house prices fell 20% nominally in the 90’s.
Currently, according to Nationwide house prices have fallen by 11%.
Although this was closer to 13% at the start of the year.

Oh and land reg currently shows falls of approx 13%

It appears that, on balance, nominal falls are similar now to what they were in the 90's.

Generali

IveSeenTheLight wrote: »

1) Nominal falls were greater in the 2008 correction when compared to the 90's correction.

According to Halifax (Sorry LR data only appears to go back to 1995 for comparison purposes), the 2008 correction dropped the average house price

In the 90's correction, they peaked at £70,588 (July 89) and troughed at £60,196 (Feb 93), representing a £10,392 reduction or 14.7% decrease in price

In the 2008 correction, they peaked at £201,081 (Aug 07) and troughed at £157,066 (Mar 09) representing a £43,925 reduction or 21.8% decrease in price

So we can see that this correction is indeed greater both nominally and as a percentage than in the 90's.
If people are making a direct comparison, wouldn't it therefore equate that they should be expecting rises similar to what happened in the 90's.

[Tongue_In_Cheek]What's holding prices back from increasing? Some would say mortgage rationing is dampening the effective demand and that this could be related to holding back a dam . Sooner or later, it will overflow. [/Tongue_In_Cheek]

2) I'm not interested in subjective termoniology. I call both periods house price corrections.
The times we are discussing they corrected from being above the long term trend, similarly in other period, the correction saw them increasing back to that long term trend after they had over corrected.

The thing is, by looking at house prices in isolation, we are ignoring the value of the money used to buy those houses. From July 1989 to Feb 1993 the RPI rose from 115.5 to 138.8, an increase of 20%.

From Aug 07 to Mar 09 the RPI rose from 207.3 to 211.3, an increase of 1.9%!

There was a large decrease in the value of the money that houses were being priced in during the early 90s. That didn't happen in the late 00s.