Nationwide flatlining.... -0.1 MOM

adr0ck

Vaux-Hall wrote: »

Actually my point was that there's no point saying things like: "I think property prices will fall 10% next year", as there are too many unknowns for anyone to hazzard a reasonable guess, without at least adding a lot of provisos.

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thats why i stated it as very simplistic guess work..........which means exactly what it means its just a guess......................based on what i think

this bits based on more evidence though

flats will fall a lot more than detached house (this will be due to supply and demand)

Bf109

I fail to see what the problem is with ever rising house prices. At least when prices are rising, the grubby, unwashed, hoi-poloi will soon be priced out of my area.

That HAS to be a good thing! After all, who wants some working class oiks like nurses or policemen living next to you?

Pricing out these undesirable unmentionables is the best thing labour have done!

beingjdc

adr0ck wrote: »

it doesnt take 18 years to reach the top

the 18 year cycle includes minimum of 10 years growth

see below for average uk prices when we went into last downturn

1985 31,103
1990 59,785
1991 62,455
1992 60,821
1993 61,223
1994 64,755
1995 65,641
1996 70,534
we had 2 -3 years of lower prices from the highpoint and then prices were higher (than the last highpoint)

Interesting figures, where are they from?

According to Nationwide, the peak was in 1989 not 1991, so missing out those years gives an odd impression. They place the low at Q1 1993, and not surpassing the previous peak until 1998 - so 9 years not 2-3.

PasturesNew

The peak varies depending where you were:

http://www.hbosplc.com/economy/HistoricalDataSpreadsheet.asp

To instantly and directly download all data for all posttown areas as a spreadsheet: http://www.hbosplc.com/economy/includes/19_01_08PostTownsData3.xls

PasturesNew

Figures for Cambridgeshire, East Anglia

1988 £91,021
1989 £86,583
1990 £80,406
1991 £82,619
1992 £78,291
1993 £81,501
1994 £81,144
1995 £85,409
1996 £86,913
1997 £95,051
1998 £106,938
1999 £126,747
2000 £138,790
2001 £176,308
2002 £199,762
2003 £223,025
2004 £231,839
2005 £223,742
2006 £261,656
2007 £296,727

nelly_2

PasturesNew wrote: »

Figures for Cambridgeshire, East Anglia

1988 £91,021
1989 £86,583
1990 £80,406
1991 £82,619
1992 £78,291
1993 £81,501
1994 £81,144
1995 £85,409
1996 £86,913
1997 £95,051
1998 £106,938
1999 £126,747
2000 £138,790
2001 £176,308
2002 £199,762
2003 £223,025
2004 £231,839
2005 £223,742
2006 £261,656
2007 £296,727

ALL that^ has aceived is to give banks more money!

Generali

There isn't an 18 year cycle in house prices.

House prices peaked in 1974 at the end of the Barker boom/start of the oil crises.

House prices peaked a second time in 1989 (15 years later) after the Lawson boom.

House prices are still rising (just) in 2008, 19 years later.

Firstly, 2 pieces of data do not provide compelling evidence of a cyclical trend in the price of an asset and the 2 pieces of data you have (or that I have at least) don't support the hypothesis!

Secondly, if you 'know' that cycle is correct then you immediately destroy it because you know exactly where the high and low point is and thus buy all the property, land and property companies you can lay your hands on at the low point and short the hell out of everything at the high point. That pushes up prices at the low and down at the high. That process continues until the 'cycle' is broken.

In simpler terms:

Theory of any asset prices (house prices included) moving in cycles = bunkum

There's a good section on this (better than I write) in A Random Walk Down Wall Street.

moneysavinmonkey

Generali wrote: »

There isn't an 18 year cycle in house prices.

House prices peaked in 1974 at the end of the Barker boom/start of the oil crises.

House prices peaked a second time in 1989 (15 years later) after the Lawson boom.

House prices are still rising (just) in 2008, 19 years later.

I think it's a given that while 18 years is the general 'rule' there are always multiple factors which can squash or stretch the cycle. a 15 year or 19 year cycle would fit in with the theory nicely IMO.

BTW in what measure of house prices are they still rising in 2008??

Generali wrote: »

Secondly, if you 'know' that cycle is correct then you immediately destroy it because you know exactly where the high and low point is and thus buy all the property, land and property companies you can lay your hands on at the low point and short the hell out of everything at the high point. That pushes up prices at the low and down at the high. That process continues until the 'cycle' is [STRIKE]broken[/STRIKE] repeated!.

what you have described is exactly what happens in a cycle... prices reach a high point... once people realise they reached the top (ie are too expensive and unlikely to keep rising) they they start to get out of property (e.g. companies leasing their offices rather than owning them)... prices fall... prices keep falling until the 'low point' is reached then everyone starts buying again... prices start to rise.. off we go again! How does this break the cycle it just reinforces it! As there is lag in the system and noone is exactly sure when the top or bottom is as well as the fact people buy and sell houses to live in and not just as investments rounds the whole thing out.

Generali wrote: »

In simpler terms:

Theory of any asset prices (house prices included) moving in cycles = bunkum

There's a good section on this (better than I write) in A Random Walk Down Wall Street.

I think theory of market cycles is pretty well established, without even meaning to you have nicely demonstrated it in your above two points!! I'll definitely look that book up though, thanks for the recommend.

Generali

If you've got 2 data points then you've got evidence of precisely nothing. If you can show house price cycles going back further then I'm impressed. If nothing else I'd like the raw data as I've had a heluva time getting hold of good historic house price data prior to the 70s.

There really isn't such a thing as a house price cycle. What I describe is not a house price cycle, it is an argument as to why you can't possibly have one.

Let's assume that currently there is a house price cycle running 15-19 years in length and we're sitting in 2026. As it is 18 years since the last peak, I can short the heck out of builders stocks and also short the Halifax index in the knowledge that I'm going to make money. However, in 2025, you know that anyone with any sense is going to be shorting the market so you get in there first, making the market drop before it's time. You can keep taking the date back and back and people will short the market earlier and earlier so bringing the 'inevitable' fall in house prices forward to an earlier date so that any cycle is destroyed. Please don't say I'm making your case for you because I'm really not. If I'm not explaining myself well then that's a different matter.

People have the same ideas about stock markets. You often hear stuff like markets crash in October or markets never fall in January. It's rubbish and always has to be rubbish due to the mechanism I try to describe above.

There is no established theory of asset price cycles. There is a theory of business cycles that is quite widely believed which is connected to variations in stock levels over a 7 year period. I think that's rubbish too although a lot of people that are a lot brighter than me subscribe to it.

My idea is that in the UK, people want to believe that buying a house is a one-way bet to riches. As a result they will bid up prices to whatever levels lenders will let them get away with. Eventually the whole rotton structure has to collapse because simple compound interest tells us that house prices can't rise much faster than the ability to pay for them (usually with a mortgage so through net wages) for long. If you taught compound interest and it's implications in schools you could revolutionise the way people view money in this country.

mystic_trev

Generali wrote: »

If you've got 2 data points then you've got evidence of precisely nothing.

brill post Generali - Thanks

There are too many people who are saying, that if we have a crash, it really dosen't matter because in 10 years time House prices will have doubled! I wouldn't be surprised to see a slump in the property market then no (or little recovery) for a decade or more. Just look to Japan in the late 80's. A Country with limited land resources and low IR's. After their massive HPI what came later, and nearly 20 years on has it recovered?