Jump to content
House Price Crash Forum

Nationwide Data Out For January 2009


Recommended Posts

  • Replies 146
  • Created
  • Last Reply

Top Posters In This Topic

Top Posters In This Topic

Posted Images

So surely to counter the negative factors, you and previous poster need to balance the effect of loosening credit restrictions, assuming that the current credit crisis will not continue in perpetuity. i.e. there are buyers out there who will return once they can get a loan...................?

credit will remain restricted for many many years - the "loose" credit of the Past 10 years is history...IMO

Link to post
Share on other sites
credit will remain restricted for many many years - the "loose" credit of the Past 10 years is history...IMO

IMO the "loose" credit of the last 10 years was the abnormality.

Its now returned to normal and will probably remain there for a generation - until the "pain" caused by loose lending is forgotten.

Of course it may be that we've seen the peak of living standards in the UK and its all downhill from here. Real wages for the middle and working class Americans haven't changed since the 1970's - any extra "stuff" has been bought by more hours worked, women joining the workforce and of course more debt.

Cheers...

Edited by ItsColdUpHere
Link to post
Share on other sites

Of course, ther is the remote possibility that now it is plain for all to see that our ecnomy is well and truly F**ked, our great leader might actually start to do somehting about fixing it as opposed to deperately trying to re-inflate house prices.

Link to post
Share on other sites
Of course, ther is the remote possibility that now it is plain for all to see that our ecnomy is well and truly F**ked, our great leader might actually start to do somehting about fixing it as opposed to deperately trying to re-inflate house prices.

Re: our great leader might actually start to do somehting about fixing it as opposed to deperately trying to re-inflate house prices.

You're being silly now.

Link to post
Share on other sites
Because they don't have to sell below peak prices.

These stats are a waste of time and do not reflect the reality on the the ground. Until asking prices across the board are 20% below peak prices none of us here will benefit from this 'crash'.

Where are the family homes going for 2001 prices? Nowhere.

If it takes another 5 years for asking prices to significantly dip below peak prices then I'm wasting my time.

Don't know about you.

NO,

it's because they can't afford to go any lower because they have MEWed so much. That's one of the things this is different this time. This time repossesions will obliterate ALL previous records.

Mark my Words. :ph34r:

Link to post
Share on other sites
NO,

it's because they can't afford to go any lower because they have MEWed so much. That's one of the things this is different this time. This time repossesions will obliterate ALL previous records.

Mark my Words. :ph34r:

Yep.

Imagine Fred Smiths balance sheet:

July 2007.

Mortgage 140K

House "worth" 200K.

40K on credit cards.

Net worth of Fred Smith July 2007 = 20K.

"I'm in the money" sings Fred in the bath, thinking about his house being worth 230K next year, and what he can spend that "extra" 30k on.

---------------------------------------

Wind forward to July 2010:

Mortgage 140K

House "worth" 120K. (A guess obviously)

60K on credit cards.

Net worth of Fred Smith July 2010 = -80K.

Fred Thinks "whats the point", declares himself bankrupt, and walks away.

Repeat times 1,000,000.

........

Edited by ItsColdUpHere
Link to post
Share on other sites
Yep.

Imagine Fred Smiths balance sheet:

July 2007.

Mortgage 140K

House "worth" 200K.

40K on credit cards.

Net worth of Fred Smith July 2007 = 20K.

"I'm in the money" sings Fred in the bath, thinking about his house being worth 230K next year, and what he can spend that "extra" 30k on.

---------------------------------------

Wind forward to July 2010:

Mortgage 140K

House "worth" 120K. (A guess obviously)

60K on credit cards.

Net worth of Fred Smith July 2010 = -80K.

Fred Thinks "whats the point", declares himself bankrupt, and walks away.

Repeat times 1,000,000.

........

Hi ItsColdUpHere,

that's it, spot-on. :)

Link to post
Share on other sites
NO,

it's because they can't afford to go any lower because they have MEWed so much. That's one of the things this is different this time. This time repossesions will obliterate ALL previous records.

Mark my Words. :ph34r:

+ 1.

I viewed a property on the market for £325K before Xmas. Blatantly wasn't worth that given the area and the work required to bring it back from the 1970's. Discovered that the VEndor had attempted to sell it at auction for £260K but got no bids higher than £249. Put in an offer for £240K - no estate agents fees - and this offer was rejected out of hand.

Discovered a few days ago that the house is back at auction with a reserve price of £250K, which it now won't get unless a fool so happens to pass by. Unlikely. It's also on rightmove at £275K and £325K. The house has two mortgages against the title, both with mortgage companies I hadn't heard of. It's clear the Vendor is having to sell because of debt, yet there is still a sparkle of unfounded hope that 2007 will return and everything will be okay.

My conclusion is that some people out there have very little sense. They're going to suffer for this, sad though it may be.

Edited by Cozza
Link to post
Share on other sites
Hi ItsColdUpHere,

that's it, spot-on. :)

Mate of mine started with a 45K mortgage 5 years ago on a house worth 60K.

No credit cards.

15K of endowments.

Net value = 30K.

-----------------

At the peak in 2007 his house was "worth" 140K.

Mortgage is now 90K.

Credit cards 20K.

Endowments sold.

Net value at peak = 20K. So he's already down on the deal.

-----------------

If house prices fall a third he'll be worth -25K, and adding to that he's running up about 6K a year on the credit cards just to keep his head above water, due to the doubled mortgage payments and the credit card minumum payment.

He takes home £1200 a month.

And I PERSONALLY know of 4 other similar examples.

It would be funny if they weren't going to bring us all down with them.

But they are, so it isn't...

Link to post
Share on other sites
By factoids I assume you mean facts. I await to hear how I have missed the point spectacularly by correcting your misguided lecture purporting to clear up the "confusion" about trend lines.

This is not how the 2.9 figure is arrived at. It is a trend line. Look it up.

If you can't be bothered to look it up, ask yourself how a final data point could ever be above or below the "trend" calculated by your imagined method.

Don't fight boys, you're both right. Wikipedia has 2 separate entries for "trend line".

"Trend line (mathematics)" is defined as line of best fit.

"Trend line (technical anaysis)" - IE financial - is defined as a line joining a start and end point.

Link to post
Share on other sites
since every man & his dog these days uses MS Excel, i think that, in common parlance, 'trendline' mostly now has the same as in MS Excel, which, if you ask it for a linear trendline, does an OLS calculation, i.e. comes up with a line of best fit.

Which is how Nationwide do it. Except they use an exponential trendline.

Using a carefully chosen dataset of course.

You can download the dataset and do it yourself.

Edited by ItsColdUpHere
Link to post
Share on other sites
Don't fight boys, you're both right. Wikipedia has 2 separate entries for "trend line".

"Trend line (mathematics)" is defined as line of best fit.

"Trend line (technical anaysis)" - IE financial - is defined as a line joining a start and end point.

I'm afraid we are not both right. The 2.9% Nationwide trend is not and cannot be calculated in the way Orange boy suggests. Nor does the method Orange boy has outlined to calculate this trend correspond to any used to define a trend line in technical analysis. Nor is the 2.9% Nationwide exponential trend a trend line in this dubious and misleadingly-named art. These lines are almost always straight (though sometimes on logarithmic graphs), and join two or more price points on a graph thought to be significant inflections, not the start and end points. The current price level is usually judged in relation to such lines rather than defining them.

In the context it is clear that he has simply made a mistake and has now gone quiet about it after being rather too aggressive in his initial counter. It was just his bad luck to run into a patronising pernickity arzehole who likes correcting anonymous people on the internet. On the other hand he has learnt something about statistics and about the danger of being too quick to respond when you have been provoked.

Edited by mirage
Link to post
Share on other sites
IIRC Haliwide base their stats on asking prices (?)

I would love to see a graph based on OFFERED prices :P

No, they base their statistics on sold prices, the price that a property actually changed hands for.

They have no interest in asking prices as they don't give mortgages based on these.

The rightmove statistics are based on asking prices.

Nationwide, Halifax and the Land Registry are sold prices, manipulated and smoothed to varying degrees.

Edited by ItsColdUpHere
Link to post
Share on other sites
Which is how Nationwide do it. Except they use an exponential trendline.

Using a carefully chosen dataset of course.

You can download the dataset and do it yourself.

agreed, it's the same thing, but rather than doing OLS on y = a + bx, you do it on ln(y) = ln(a)+bx.

the data is very ropy, i suspect.... there are discontinuities in the definitions.

Link to post
Share on other sites
agreed, it's the same thing, but rather than doing OLS on y = a + bx, you do it on ln(y) = ln(a)+bx.

the data is very ropy, i suspect.... there are discontinuities in the definitions.

I'm not actually saying that the dataset is ropey (although it may be for all I know), I'm saying that they've deliberately used a portion of the dataset (1973 onwards) that gives them the answer they want.

If they used the FULL dataset from 1952 onwards it would give a much lower trend growth, and make house prices STILL way above the trend value.

Cheers...

Link to post
Share on other sites
If you go to the nationwide website, houseprice document archive and download the January 2002 house price pdf, you'll see that they USED to use 1.5% per annum as there average rise, starting from the 1950's - much closer to the truth as this reflects wage improvements above inflation in the economy.

They then rebased to 1970 and used the huge house price increases since 2002 so as to create the new 2.9% "trend" thus seeming to justify higher house prices.

I'd show the graph from the document here but I don't know how.

Here's the linky:

http://www.nationwide.co.uk/hpi/historical/pdf/MPR0201.pdf

Some brilliant reading :-

…and lenders generally remain prudent

Despite high levels of debt most lenders and borrowers remain more prudent than in the eighties. Most lenders appear to have learned the lessons of the past with the proportion of lending above 95% of the value of the property currently half the level of the eighties. At some stage this will limit the headroom for price growth particularly in London and the South East and naturally slow the market. Borrowers should not be encouraged to over-stretch themselves in spite of low mortgage rates and buoyant economic conditions.

Link to post
Share on other sites
There's confusion here about what a trend line is. A trend line simply gives you the average rise (or fall) per time unit that you need to get from point A to point B. In other words, it always starts on data point A and ends on data point B and presents a smooth line in between. In fact, it is defined entirely by points A and B and ignores any of the data in between. You can then look at the data between points A and B and say whether they were above or below the trend line. When you add new data beyond point B, the end of the line shifts accordingly because it always sits on the last data point. The last data point can't fall below the trend line because it defines the end point of the trend line.

What the Nationwide graph purports to show is actually a line of best fit, which is an entirely different beast because, unlike a trend line, it is influenced by every point on the line, not just by the end points. You can calculate lines of best fit in many different ways - linear, logarithmic etc. Lines of best fit do show a trend but are not, technically, the trend line. I haven't taken the trouble to work out whether the line shown on Nationwide's graph is indeed a correctly calculated 2.9% per annum line of best fit, but it's definitely not a 2.9% per annum trend line.

Either way, the 2.9% figure (or whatever it is) will go down over the coming months and probably years.

Excellent point, and good post.

A true trendline like a moving average goes up or down with the price movement.

We are not just arguing over symantics here - this is actually crucially important.

Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
  • Recently Browsing   0 members

    No registered users viewing this page.

×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.