A lot of talk...

m00m00

Generali wrote: »

Just a thought on the mathematics. Wouldn't the current boom have distorted the long term average growth rate, dragging it upwards? Similarly, a reduction in house prices would pull the long term rate of increase down.

I'd do the sums if I could be bothered.

this was commented on, and ignored, the last time I've seen the light, brought up the argument about average trends.

PRINCESSKERRY

Turnbull2000 wrote: »

Land registry for North Tyneside;

Average 139K Quarter -8% Annual -2.9%

For sale and to let boards are everywhere. Some regional statistics posted on the HPC Newcastle thread seem to explain why;





So yes, all evidence points towards a remarkably smooth levelling off...

Can I ask how did you find these figures out? I would like to know some figures for my area, I have sold but there doesn't seem to be a lot else moving.

IveSeenTheLight

m00m00 wrote: »

this was commented on, and ignored, the last time I've seen the light, brought up the argument about average trends.

When? Justify this please.

IveSeenTheLight

Generali wrote: »

Just a thought on the mathematics. Wouldn't the current boom have distorted the long term average growth rate, dragging it upwards? Similarly, a reduction in house prices would pull the long term rate of increase down.

I'd do the sums if I could be bothered.

It possibly would.
I see the picture I posted shows a trend of 2.4% while the source is currently showing a 2.8% trend although on a slightly different timescale (1978 - present)

dopester

IveSeenTheLight wrote: »

Ok, but this still boils down to the fact that the House Price trend measured for over the last 30 years shows that house prices on average are overpriced by approx 22%.

I do think you're putting too much belief and trust in that red trend line, and as Paul suggested, I have always just considered the trend line as a historical average from 1975 price to 2008. Even if the trend line is adjusted for inflation it still doesn't mean much in a deflationary situation.

The trend line would be lower (as I understand it) if we'd not had quite a few years of furious easy money, relaxed mortgage lending, at increasingly higher multiples, and many very questionable self-cert mortgages.

The chart itself makes no claims on right and wrong, or where average UK house prices should be - just what they were and what they have been allowed to become.

Of course if I'd been running things, with power over interest rates, and still with a mind for a half-sustainable feel-good factor to the benefit of the economy, and had FSA powers over the main lenders to limit multiples to x4, I think this is where we would be now.



(and that would be me being very generous stoking economic policy for sustainable consumer spending and house prices ~ whilst still risking some pain in a downturn)

So your holy trend line is well above my idea of economic sense or affordability for the longer term. And even with this retrospective alternative, I'd still be expecting some UK pain if the current situation with credit crisis and liquidity existed in USA and major players in rest of Europe, but in a position where we'd be better prepared..





Given that we've had a number of years of extreme house price inflation, my soft landing projections give this outcome (although there may be more of a delayed standoff in 2008-09 between sellers and buyers)

IveSeenTheLight

dopester wrote: »

I do think you're putting too much belief and trust in that red trend line, and as Paul suggested, I have always just considered the trend line as a historical average from 1975 price to 2008. Even if the trend line is adjusted for inflation it still doesn't mean much in a deflationary situation.

The trend line would be lower (as I understand it) if we'd not had quite a few years of furious easy money, relaxed mortgage lending, at increasingly higher multiples, and many very questionable self-cert mortgages.

But the trend line includes when house prices dropped in the early nineties
Surely we must accept the trend as a good indication of what house prices should be given the trend is measured by more than 30 years.

dopester wrote: »

Of course if I'd been running things, with power over interest rates

:rotfl: :rotfl: :rotfl:
If you are so good, shall we be seeing you as the next Prime minister, Chancellor of the exchequer or in charge of the BoE?:rotfl: :rotfl:
Talk about blowing your own trumpet

kingkano

dopester wrote: »

<snip>

<snip>

Hysterical. You think prices will fall roughly 75% and then flatline around there? Real world this means my 2 bed flat I sold last year for 160k will be worth 40k? You really think this would EVER come to pass??

That flat had a rental value of £700pcm, thats before rents have increased apparently in the last year. IO mortgage on 40k (heck lets be completely insane and say 40k @ 8%) is £266pm. Need I point out why your forecast won't ever come to be?? Venture capitalists will be in way way before that stage IMO.

brit1234

kingkano wrote: »

Hysterical. You think prices will fall roughly 75% and then flatline around there?

I think a 40-50% fall is now extremely likely based on lending at 3.5 times salary. We would have to have giant inflation for 75%.

obsessed_saver

kingkano wrote: »

That flat had a rental value of £700pcm, thats before rents have increased apparently in the last year.

Again, the achievable rent is based on the general economy. If the whole economy is in for a rough time, people lose jobs, the Poles go home, do you think rents will only ever go up? :rolleyes:

Maybe we're heading into a rental bubble now. www.rentpricecrash.co.uk anyone?

Snooze

dopester wrote: »

I've no idea if you'll end up being right here but that graph just makes me :rotfl: :rotfl: :rotfl: :rotfl: .

:T

Rob