Thursday, Mar 12, 2009
Blast from the past (2006).
Guardian: There's no need to fear a house price bubble
"But even on this pessimistic case, there seems very little chance that prices could decline by 14%, as they did in 1991-92, when mortgage rates rose briefly to 15%. In that depressing period, mortgage interest payments absorbed 15% of household income, while today's low interest rates have kept that ratio down to only 9%"
PREDICTION FAIL.
Posted by ictoa @ 09:49 AM (419 views) Add Comment
4 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. letthemfall said...
Wryly amusing to read this now. The article was based on the dubious work of a couple of Oxford academics, which I remember from the time thinking was utter nonsense. But it is an instructive example of how just about any conclusion you like may be drawn from posthoc fitting to data. Goes to show that Oxford academics aren't as smart as some might think. I imagine they do not cite this particular work as an example of their best.
2. uncle tom said...
Nice bit of archive trawling ictoa,
The thing is that academics who have never really lived in the real world are all too often blissfully unaware of their lack of wisdom and conspicuous naievety. They easily assume that because they immersed themselves in books and climbed the academic ladder, that they must therefore know best.
Unfortunately, their lack of street wisdom shields them from one of life's fundamentals - sh*t happens.. - and any scenario that does not readily withstand the upsets periodically occasioned by crooks, idiots, natural calamities and the inevitability that humans will always be greedy; will ultimately come unstuck..
In this instance, they also failed to see the many unsustainable trends in the global economy, and ask the simple question "as this has to end at some point, what happens next"
3. Mr G said...
Quite right Uncle Tom, a typical piece of academic naievety.
I wonder what his take on the housing market is today?
4. letthemfall said...
Not so much lack of worldly wisdom but lack of understanding of statistics and drawing conclusions from data that cannot support them. Mind you, it's not just academics who do this.