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I said on a previous thread I'd get my crash progress charts updated. A bit later than planned, here they are:

Nominal price fall from peak:

crash1.png

Given that last time round (1989-1995), there was (much) higher inflation, the nominal falls are much greater. However, once adjusted for inflation the Nationwide falls are rather similar. Halifax is different - last time the falls were more gradual, although the eventual drop was similar to Nationwide.

crash2.png

The forward prediction on this graph is based on mortgage approvals correlation, with a bit of affordability and future price expectation thrown in for good measure. This is the latest HPI prediction, with comparison against Nationwide and Halifax figures.

crash3.png

Note that the previous crash is the only time the prediction was way off. The current difference between predicted and actual HPI is within expectations.

post-27-1235857593_thumb.png

post-27-1235857604_thumb.png

post-27-1235857625_thumb.png

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Having done some similar analysis myself, can I suggest/recommend that you also look at the 70s-80s crash - there was a blip in the mid 70's caused by the gov't's high inflation policies, but the general profile matches the curve remarkably well.

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Thanks for that.

These should be added to the graphs page.

How did you derive the falls from the mortgage approvals correlation?

Year on year HPI tends to follow 6 months behind mortgage approvals data.

I divide the BOE approvals data by total stock which gives a slightly better long term picture - as stock increases, you'd expect the average number of house sales to increase as well.

I also use two other factors:

1. the affordability ratio - nationwide average house price / average wage

2. the average house price growth (or decline) over the past 30 months as a measure of future expectation.

I then use multipliers on each of the three stats and add them together. Then I cheat and use Excel's solver function to achieve the best fit between the result and the actual HPI. So it's a bit arbitrary I guess, but gives a good approximation.

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Having done some similar analysis myself, can I suggest/recommend that you also look at the 70s-80s crash - there was a blip in the mid 70's caused by the gov't's high inflation policies, but the general profile matches the curve remarkably well.

My monthly HPI stats only go back to '83; the BoE quarterly approvals data only to '87. I could interpolate the quarterly HPI stats I have for the 70s, but not right now I'm afraid!

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  • 442 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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