Thursday, Sep 27, 2007
Still some momentum in prices yet ?
House prices 'ignore credit woes': BBC
Interesting graph on page 3 of the actual report
here .
It shows that house price with trend growth would be £130K, but is actually £180K.
Anyone know how this survey is put together ?
Is it asking prices ? In which case, I wouldn't expect to see any hit from the crunch yet.
Posted by voiceofreason @ 08:27 AM (560 views) Add Comment
3 Comments
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1. alan said...
Hi VoR,
Extracted from the Methodology page on the Nationwide website:
"All house price information is derived using Nationwide mortgage data. This data is extracted monthly for mortgages that are at the approvals stage and after the corresponding building survey has been completed. Approvals data is used as opposed to mortgage completions since it should give an earlier indication of current trends in prices in the housing market".
2. dohousescrashinthewoods said...
"It shows that house price with trend growth would be [between] £130K [and 140K], but is actually £180K"
Suggesting between 28% and 38% overvalued.
Add a market undershoot on the way down (as per previous cycles) and a 50% correction doesn't look unreasonable.
If fundamentals haven't greatly changed (as many suspect but few in the media acknowledge) and the boom was purely a "cheap money" effect, then the credit crunch will usher in HPC, average prices will halve, lots of ordinary people will be saved from IHT and FTBs will be able to buy houses.
It's a compellingly basic analysis with a media-baiting heart-strings overtone "hard working families" and all that. Can anyone get this into the press as the alternative view? This isn't all about doom, the upsides of HPC are many, as are the downsides of HPI.
3. talking rot said...
Dohouses....
I thought the trend for house prices about approximately 3 to 3.5 times average salary. Given that, outside London, average salary is about 25K, doesn't that mean the trend grouwth would put the value of the average house to be about 90K and not even the 130-140K? This implies an even greater fall. Or am I barking up the wrong tree? I'm currently working abroad and have partial access to a intermittant 56K dial-up line so I can't get the report itself.