House Price falls down 4% year on year (Halifax)

jamescredmond

'crash' isn't the correct term.

'gradual reversal' is probably closer.

and it's def. not 'slowdown'; a euphemism favoured by the bbc.

Generali

The way it works is this.

Halifax compare a 3 month rolling average against a 3 month rolling average, so in the case of these figures, they compare the average sale price for Feb-Apr 2007 with the average sale price for Feb-Apr 2008. That figure is down 0.9%.

However, if you take the average sale price for Apr 2007 (£196,262) and compare it with the average sale price for Apr 2008 (189,027) prices are down by 3.7%.

They use the rolling average as it smooths the figures out - it works the same way on the way up as the way down.

There is no definition for a crash. The usual definition of a bear market in the equities world is a drop of 20% from the peak. I would take a crash to be a fall of 20% as measured by the Land Registry in real (ie inflation adjusted) prices because of the way that the housing market works.

If you dislike that then make up your own definition. A fall of 0.9% qualifies in some people's eyes it seems. For others it's not worth defining as house prices never go down.

morg_monster

kind of off topic - but was the cartoon in the OP really done in 2002? What was happening then - was that the last slump? (I know market picked up again in that one before going YOY neg, but thought that was later than 2002?)

WTF?_2

morg_monster wrote: »

kind of off topic - but was the cartoon in the OP really done in 2002? What was happening then - was that the last slump? (I know market picked up again in that one before going YOY neg, but thought that was later than 2002?)

I believe that one of the indices went slightly yoy negative in 2005. It looked like we were on course for a 'soft landing' but then the BoE inexplicably cut interest rates and the housing market took off on another spurt of wild growth on the assumption that interest rates had maxed out at 4.75% and were on a firm downward path.

Probably the worst financial decision in recent history - even the Governor (Mervyn King) voted against it to his credit.

Anyone who piled into the market since then is looking at being in serious financial doo-doo now.

Treadmill

Interest rates maxed at 5.75% this time and are on the way down again so house prices start to rise again about September or October.

abaxas

Treadmill wrote: »

Interest rates maxed at 5.75% this time and are on the way down again so house prices start to rise again about September or October.

Go and switch on your hob, then place your hand on the gas flame/electic ring. Hold it there for 30 seconds repeating over and over 'I'm a bank'.

Then come back and reword your answer.

brit1234

morg_monster wrote: »

kind of off topic - but was the cartoon in the OP really done in 2002? What was happening then - was that the last slump? (I know market picked up again in that one before going YOY neg, but thought that was later than 2002?)

Its a US cartoon, for years in the US economists like Peter Schiff have been talking about the dangers of a international property bubble and other distortions due to low interest rates.

http://www.youtube.com/watch?v=rhJaVEWAG24

nollag2006

0.9% fall ???

Hardly a crash now is it??

Now that the credit crunch is ending, we should see house prices start to pick up pace again nicely

Winner !!!

LittleMissAspie

Is this going to happen for the next two years? Is someone going be along every month saying "0.5% in one month is hardly a crash!", conveniently forgetting that prices have dropped some 4% in the past few months alone?

King_Of_Fools

People have already changed to saying that houses have still increased over the last two years! Then it will be three years ...

Personally, this graph is my favourite at the moment!