Lodger

timezone

There is!

They say in the media (and are technically right) that we have reached the long term house price trend, based on the nationwide graph that we also have in the main page. However, not many people realize that this long term trend line changes wiledly over time. In the following excercise I took the nationwide data of real house prices up to Q1 2009. I then did the following: 1) I computed the exponential trend line, just to see that I can reproduce the nationwide line (result: I can) 2) Computed the exponential trend line, as it would have been computed in different times based on the data avaliable at that time. I did that for several dates: the peak/trough of the current and previous cycles, and also the points in which the "long term annual growth rate" was at the extreme (lowest and highest) in the previous boom/bust of the '80s/'90s. In all cases I extrapolated the line up to the present time. 3) I also added a trend line which shows the trend point at any given time based on the data up to that time (the thick yellow line) 4) I also show the 'long term annual growth rate' computed at the time, just to show how much it changes. All this excercise is mainly to show the the 'long term trend line' doesn't say much because it is affected by booms and busts (the 34 years of data are mearly 2/3 boom-bust cycles). Just some fun data: Using the trend line computed Q1 2009 house price average should be 148.5K, very close to current value of 149.7K Using the trend line comupted at the peak of the '80s boom, current price average should be 181.3K Using the trend line computed at the tough of the '90s bust, current price average should be 111.3K quite a range, I would say.... What do you guys think?

Wow! true insider

Sibley, if you ever have your troll status removed (which I'd like to see) can you keep the avatar? makes it easier to spot your posts.

+1

£25X30X12 = 9K (assuming you don't pay interest, only repaying capital) £25X12/30K = 1% (for the entire 25 years, assuming you refer to interest only mortgage) Your numbers do not add up even remotely, Sibley.