House prices suffer biggest drop since 2009 - Nationwide -2.6%

ruggedtoast

They are celebrating this news over on hpc.co.uk. They are excited!

1. dill said...
"...And double-dip will push them down further"

I wonder how long it will take for the mainstream media to admit/understand that Britain isn't in a technical recession, but rather a technical depression?

Thursday, August 2, 2012 09:27AM
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2. a saver said...
Thanks happy mondays you made my thursday!
With a few more headlines like this, perhaps more people will give up the idea of future gains and put their holiday homes etc on the market and really get the ball rolling.

Thursday, August 2, 2012 10:35AM
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3. mrmickey said...
Somebody in the office has just bought a buy to let poor !!!!!!, lets hope for his sake the government hit the hyper inflation button soon.

Thursday, August 2, 2012 11:28AM
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4. orcusmaximus said...
Love all the comments on the DM website. Looks like most people have woken up to high house prices being a bad thing.

Thursday, August 2, 2012 12:45PM
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5. happy mondays said...
@ a saver - I aim to please, let's hope the good news continues

@ orcusmaximus, yes i have noticed over a period of time that people are starting to understand high house prices are not a good thing! I now do not feel like weirdo at the dinner party, venting off my anger at how stupid humans are!

Thursday, August 2, 2012 01:02PM
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RenovationMan

wotsthat wrote: »

HPC looks like a site where members have a poor grasp of the price of things and even less on their value.

It's never a good idea to restrict yourself to a group of acquaintances who are all of the same mind as you. All you do is validate your own position (whether it's right or wrong) without any opposing viewpoints.

Much better on here.

Generali

ash28 wrote: »

They probably do, but the methodologies of both the Halifax and Nationwide are very similar.

They both use hedonistic regression to adjust the quality of their data....

I looked this up before and there is a subtle difference between the 2 methodologies that means that Halifax is more susceptible to volumes falling.

Halifax uses multivariate regression analysis whereas Nationwide uses a mix adjusted average. It is a known limitation of multivariate regression analysis (as far as I can find out from Google anyway) that it is not suitable for use with small sample sizes.

I reckon that excluding regional data there are about 3,000 different 'reasonable' data sets that are seeking to be measured by the Halifax data (e.g assume only 1 or 2 bathrooms, max 3 reception rooms, only 1 or 2 toilets etc). In 'normal times', Halifax was measuring their index using about 12,000 properties a month (link). As transactions are down ~50% since the peak it is reasonable to assume a comparable fall in transactions covered by these data to 6,000. However, as they exclude BTL which I believe has stood up better than other areas of the market the fall in the sample may well be greater.

The Halifax monthly data have clearly become more noisy since the credit crunch started with price swings of up to 3% some months! IIRC even HBOS themselves have been looking at their methodology although I can't find a link.

Now I am no expert at this stuff although I have studied a little statistics, in fact as little as I could get away with given that I studied economics so I am happy to be corrected. It is my honest belief that the HBOS figures are suffering from low transaction figures.

Generali

RenovationMan wrote: »

It's never a good idea to restrict yourself to a group of acquaintances who are all of the same mind as you. All you do is validate your own position (whether it's right or wrong) without any opposing viewpoints.

Much better on here.

You (and others) might be interested in this:

http://en.wikipedia.org/wiki/Confirmation_bias

It's been responsible for many a poor investment over the years.

RenovationMan

Generali wrote: »

You (and others) might be interested in this:

http://en.wikipedia.org/wiki/Confirmation_bias

It's been responsible for many a poor investment over the years.

Thanks Gen, that's the word I was scrabbling for in the depths of my memory when I wrote my post "Confirmation Bias".

While I might not agree with some of the posts from Brit, Macaque, Thrugelmir, their contribution is valuable to the board in as much as they provide an alternative viewpoint that might not make you change yours, but it does make you think.

RenovationMan

Some of the 'gangs' in here need to have a think about confirmaton and choice supportive bias. We know who I'm talking about....

the_flying_pig

Generali wrote: »

I looked this up before and there is a subtle difference between the 2 methodologies that means that Halifax is more susceptible to volumes falling.

Halifax uses multivariate regression analysis whereas Nationwide uses a mix adjusted average. It is a known limitation of multivariate regression analysis (as far as I can find out from Google anyway) that it is not suitable for use with small sample sizes.

I reckon that excluding regional data there are about 3,000 different 'reasonable' data sets that are seeking to be measured by the Halifax data (e.g assume only 1 or 2 bathrooms, max 3 reception rooms, only 1 or 2 toilets etc). In 'normal times', Halifax was measuring their index using about 12,000 properties a month (link). As transactions are down ~50% since the peak it is reasonable to assume a comparable fall in transactions covered by these data to 6,000. However, as they exclude BTL which I believe has stood up better than other areas of the market the fall in the sample may well be greater.

The Halifax monthly data have clearly become more noisy since the credit crunch started with price swings of up to 3% some months! IIRC even HBOS themselves have been looking at their methodology although I can't find a link.

Now I am no expert at this stuff although I have studied a little statistics, in fact as little as I could get away with given that I studied economics so I am happy to be corrected. It is my honest belief that the HBOS figures are suffering from low transaction figures.

I’ve hardly looked at the methodologies at all, much less given them any serious thought, but I suspect that the Halifax & NW methods amount to thesame thing basically. “multivariate regression analysis” and “mix adjusted average” sound like much the same thing.

Halifax are basically looking for the average house price for a ‘typical house’ – say a 3 bed house, but rather than only looking at sales of 3 bedhouses, they look at the sales of [say] 2 & 4 bed houses as well, & make inferences about the price of 3 bed houses based on changes to the 2s and 4s as well as just the 3s. NW sounds just the same, when it boils down to it. Both will move about it a bit given the small sample sizes etc.

Zero_Sum

RenovationMan wrote: »

I know that the interest is loaded up front on a repayment mortgage and that the majority of the capital repayment is on the back end. However, averaged out over the lifetime of a 25 year mortgage, the repayment portion is 1/25th or 4%.

Everyone who buys a house with a mortgage will be subject to this front loading, so the point is that someone who bought 12 months ago will obviously be 1 year further down the road. As many people on ere have been waiting 5 or more eyars to buy, then they are even furtherbehind the curve - which is fine if there are significant drops that justify the wait.

The point of my post is that I personally don't feel that the drops over the last few years were worth the wait for many people.

but you said bought 12 months ago, so why would you average over the lifetime? 12 months ago, you'd only use the interest loaded 1st year, which will be nowhere near 4%

sorry if this has already been pointed out, as I've not read the whole thread.

chewmylegoff

ruggedtoast wrote: »

I am Mrs Margaret Ree, I am.

I am Henry VIII, I am.

ViolaLass

Zero_Sum wrote: »

but you said bought 12 months ago, so why would you average over the lifetime? 12 months ago, you'd only use the interest loaded 1st year, which will be nowhere near 4%

sorry if this has already been pointed out, as I've not read the whole thread.

It has been mentioned in the odd post or two.