Losing momentum

WTF?_2

LillyJ wrote: »

I am not denying any form of crash, but "the going up bit was a blip"!????

Yeah, right. That implies they are steadily going down. Which they clearly aren't. Its not like you could by a house in the 70s for a couple of grand is it. Oh wait, you could.

The scale of the recent boom has been abnormal. The market normally goes in boom/bust cycles but the last 3-4 years have seen a boom cycle not only stretched out longer than one would expect, but also boosted beyond belief.

Historical data shows that over the long term house prices will rise. As of course will money put in the bank. If you want the absolute best returns for your money over a longer term though, history suggests that the stock market is the place to be.

boinging_2

LillyJ wrote: »

I am not denying any form of crash, but "the going up bit was a blip"!????

Yeah, right. That implies they are steadily going down. Which they clearly aren't. Its not like you could by a house in the 70s for a couple of grand is it. Oh wait, you could.

I believe they were refering to the Oct - Nov 07 Natiowide data on the graph, where we see a rise. This is a blip, as the trend is obviously downwards.

Yes HPI has been rampant, but it's not like you could buy a pint of beer for 15p in the 70s, oh wait you could. Damn wish I'd invested in beer.

kristianwilliams

LillyJ wrote: »

I am not denying any form of crash, but "the going up bit was a blip"!????

Yeah, right. That implies they are steadily going down. Which they clearly aren't. Its not like you could by a house in the 70s for a couple of grand is it. Oh wait, you could.

I think you mistook what I was saying.

The increases of 100% in 5 years, was the blip. not just increasing. The rate of the increase was the blip. Sorry I should've made it clearer.

When it accelerated as fast as it did, it was like the person driving the car suddenly slamming his foot on the gas, to get to the destination faster, so we were hitting 100mph instead of 50mph. So what is happening now, is we've had to hit the breaks hard, because we've just seen a police car upfront. So we see a decrease in speed (or in our case a drop in prices) until we get back to the "right speed" (or in our case, a lower house prices), of course there'll be the odd bit of speeding, and slowing down, but accelerating as fast as we did, well, we couldn't keep going faster and faster could we?

ianmr65

LillyJ wrote: »

I am not denying any form of crash, but "the going up bit was a blip"!????

Yeah, right. That implies they are steadily going down. Which they clearly aren't. Its not like you could by a house in the 70s for a couple of grand is it. Oh wait, you could.

It's not so much blips, or crashes, house price growth is NEVER steady, sharp rises, are always followed by sharp falls. The problem is the sharp falls go in 20 year cycles. So people forget this, and find planning for it extremely difficult.

Purch in another post found a graph that demonstrates this over the last 60 years.




from http://www.citywire.co.uk/personal/-...aspx?ID=301968

"Against almost 60 years of data and three major house price corrections, house price growth showed a sustainable floor at between 20% and 25% below the long-term trend - Recent price gains have been at between 20% and 25% above the long-term trend. Each previous boom of the last 50 years was followed by a 50% correction in price growth.
Once adjusted for the effect of the retail price index measure of inflation on spending power, house prices have already lost 5.5% since their £186,043 peak in October as measured by Nationwide, added the bureau.
The downside could be potentially more severe than previous house price booms which have occurred against a backdrop of high inflation, said bureau director Stephen Rose.
In the late 1980s overall inflation was running in double figures, offering some support to house prices, in comparison to recent RPI inflation which peaked last year at 4.8%."

Alan_M_2

ianmr65 wrote: »

Whilst the drops indicated in the graph above are wholly possible I'm not sure the timescale is realistic (making the graph appear to be a cliff rather than a reasonably steep slope.

Corrections don't happen overnight, they happen gradually and slowly...the late 80's early 90's took about 5 years from top to bottom all in and this was area dependent with some areas being two years behind the first areas to correct.

I see the writing on the wall, and whilst I'm not a subscriber to "it's different this time", each correction has it's own anatomy, occurs for slightly different reasons but with pretty much the same end result.

I've seen many people suggest the 14/15 cycle is utter rubbish...but really this is more to do with the next generation of people reaching house buying age that have no recollection/choose to ignore previous occurrences of value cycles. I'm 38 and bought a house very young at 18, I was effected severely by the early 90's crash, but anyone under the age of 34/35 will have very little recollection at all (unless they were also unlucky enough to be seriously effected).

That's a lot of people wanting to buy property that have only ever seen huge capital gains made by those that have bought, it's no surprise that this coupled with easy credit has fueled and irrational market......Just don't think you'll be buying at 30% off later this year.....it just doesn't work like that.

boinging_2

Alan_M wrote: »

Whilst the drops indicated in the graph above are wholly possible I'm not sure the timescale is realistic (making the graph appear to be a cliff rather than a reasonably steep slope.

Corrections don't happen overnight, they happen gradually and slowly...the late 80's early 90's took about 5 years from top to bottom all in and this was area dependent with some areas being two years behind the first areas to correct.

I see the writing on the wall, and whilst I'm not a subscriber to "it's different this time", each correction has it's own anatomy, occurs for slightly different reasons but with pretty much the same end result.

I've seen many people suggest the 14/15 cycle is utter rubbish...but really this is more to do with the next generation of people reaching house buying age that have no recollection/choose to ignore previous occurrences of value cycles. I'm 38 and bought a house very young at 18, I was effected severely by the early 90's crash, but anyone under the age of 34/35 will have very little recollection at all (unless they were also unlucky enough to be seriously effected).

That's a lot of people wanting to buy property that have only ever seen huge capital gains made by those that have bought, it's no surprise that this coupled with easy credit has fueled and irrational market......Just don't think you'll be buying at 30% off later this year.....it just doesn't work like that.

I thought the graph was fact?

Alan_M_2

boinging wrote: »

I thought the graph was fact?

That's where these problems occur, the graph may well be fact, but the most important question is what statistics is the graph based on?

Without a full list of parameters, the graph on it's own is whole useless and open to whatever interpretation you may wish to draw.

Lies, damn lies, statistics etc....

neverdespairgirl

Alan_M wrote: »

I'm 38 and bought a house very young at 18, I was effected severely by the early 90's crash, but anyone under the age of 34/35 will have very little recollection at all (unless they were also unlucky enough to be seriously effected).

I'm 30, and I remember it well, it was on the news, my parents were discussing it, etc.

boinging_2

Alan_M wrote: »

That's where these problems occur, the graph may well be fact, but the most important question is what statistics is the graph based on?

Without a full list of parameters, the graph on it's own is whole useless and open to whatever interpretation you may wish to draw.

Lies, damn lies, statistics etc....

It's based on the Nationwide and Halifax reported figures as far I can tell.

Also it's interesting no one ever questioned these figures on the way up.

brit1234

Alan_M wrote: »

Whilst the drops indicated in the graph above are wholly possible I'm not sure the timescale is realistic (making the graph appear to be a cliff rather than a reasonably steep slope.

The graph is very correct, its just with any figures there are ways to exaggerate or play down trends in graphs and other formats. What you need to do is look at the basic figures over a reasonable cycle, understand how they were compiled and then you can have a reasonable idea of the trend.

Alan_M wrote: »

Corrections don't happen overnight, they happen gradually and slowly...the late 80's early 90's took about 5 years from top to bottom all in and this was area dependent with some areas being two years behind the first areas to correct.

Correction can happen overnight, forget the 80s & 90s this is a completely different beast. A better comparison of what is happening is a comparison of the dot com crash. Both markets were based highly on upward speculation before their crash, there was nothing tangiable holding it up forming huge bubbles. Some would argue that that this house price crash is a direct continuation of the dot com crash through investors rapidly shifting funds from one bubble to another. What ever the truth there has never been such a huge international housing bubble created in history. From what I have seen the more exaggerated the bubble the more damage it does very quickly.

Alan_M wrote: »

That's a lot of people wanting to buy property that have only ever seen huge capital gains made by those that have bought, it's no surprise that this coupled with easy credit has fueled and irrational market......Just don't think you'll be buying at 30% off later this year.....it just doesn't work like that.

I would beg to differ, there are all ready 30% + drops in London, Manchester and else where. Yes I know there will be people unwilling to sell at these prices in general but the longer this goes on they will change their minds.