Don't Trust The (Bullish) House Price Surveys

[0q0]

Clip credit: HPC Quiet Guy

http://www.timesonline.co.uk/tol/money/article6989743.ece

Sadly, it is impossible to judge the full extent of the distortion in 2009 because neither the Halifax nor Nationwide will release figures showing how many transactions their surveys are based on — and crucially, the proportion of borrowers who are first-time buyers.

[Executive Sadman]

neither the Halifax nor Nationwide will release figures showing how many transactions their surveys are based on

Incredible. We really do live in a stalinist/brownist soviet sh1thole.

[spivT]

Another thing we do not know:

How has the "average home" changed over time?

Is it getting:

+ Larger? (in terms of sq.ft)

+ More modern? (it will be, else, they would all have 1960's kitchens and bathrooms)

+ Newer? (Again, I dont think they were all built circa 1940.)

If any of these things are happening, the indices are not comparing "apples with apples",

else the data would relate to a 1940-built house with a 1960's furnishing.

I reckon that maybe 20-43% of the rise in house prices (per the index) could be due to the upgrading

of the average home in the index. That's money that was paid for upgrading, that should be subtracted

back out, and isnt

rather than looking back to changes since the 1940's or 60's , i suggest we look at how average home's have changed

since the first half of 2009, when house prices were falling.....and we didn't care whether the avg. house had a 1960's bathroom,

because prices were going down and therefore we didn't need to look for justification in the decline of the avg. house price

according to the indices.

[Joey Buttafueco Jr]

rather than looking back to changes since the 1940's or 60's , i suggest we look at how average home's have changed

since the first half of 2009, when house prices were falling.....and we didn't care whether the avg. house had a 1960's bathroom,

because prices were going down and therefore we didn't need to look for justification in the decline of the avg. house price

according to the indices.

Indeed. There is lots of BS on here, people claiming to be expert traders yet exhibiting terrible bias that makes me wonder if they are telling porkies.

[Mammon]

The nationwide and halifax sample sizes are huge.

50% of a huge sample size is still a huge sample.

You could probably get a very good idea of house prices changes by sampling a few hundred representative streets in the UK.

Its like the pollsters, they only need to phone a few hundred people to get a good idea, phoning 10,000 wont improve things much, but sampling on a few dozen wont be enough.

[Joey Buttafueco Jr]

The nationwide and halifax sample sizes are huge.

50% of a huge sample size is still a huge sample.

You could probably get a very good idea of house prices changes by sampling a few hundred representative streets in the UK.

Its like the pollsters, they only need to phone a few hundred people to get a good idea, phoning 10,000 wont improve things much, but sampling on a few dozen wont be enough.

Agreed

Edited January 16, 2010 by Joey Buttafueco Jr

[damage]

Clip credit: HPC Quiet Guy

http://www.timesonline.co.uk/tol/money/article6989743.ece

Sadly, it is impossible to judge the full extent of the distortion in 2009 because neither the Halifax nor Nationwide will release figures showing how many transactions their surveys are based on — and crucially, the proportion of borrowers who are first-time buyers.

I assume that we are allow to trust them when the survey shows a drop in house price?

[Prof]

I assume that we are allow to trust them when the survey shows a drop in house price?

No chance. If Haliwide say prices have fallen 2%, they`ve probably fallen 5%. If Haliwide say prices rose 1.5%, they fell 2%.

[geneer]

The nationwide and halifax sample sizes are huge.

50% of a huge sample size is still a huge sample.

You could probably get a very good idea of house prices changes by sampling a few hundred representative streets in the UK.

Its like the pollsters, they only need to phone a few hundred people to get a good idea, phoning 10,000 wont improve things much, but sampling on a few dozen wont be enough.

Eh.

Halifax has a 20% share of the mortgage market.

Nationwide has between 7 to 10%. They don't like to say.

Might have been ok before the crash.

But with sales volumes so low, a fraction of a smaller number is a smaller number again.

[Bruce Banner]

I assume that we are allow to trust them when the survey shows a drop in house price?

Trust whatever you like, but seeing as it is in their interest to ramp the housing market, their figures will always be biased. If they are reporting 5% falls, the falls are more likely to be in the region of 10% .

[andygivenup]

Still now crash,I'm now not so sure we are going to have one, Government don't wont one, Sheeple don't wont one, Banksters don't wont one no appitite for one, House prices I believe will be held at all costs. The few that are waiting for cheaper house prices could be in for a long wait.

[0q0]

Still now crash,I'm now not so sure we are going to have one, Government don't wont one, Sheeple don't wont one, Banksters don't wont one no appitite for one, House prices I believe will be held at all costs. The few that are waiting for cheaper house prices could be in for a long wait.

When there are a lot of posts like mine saying how bullish it all is, and posts like yours ditto, then it might be time for the real crash to start.

Can only hope, because prices are insane if you look at them sober.

[andygivenup]

When there are a lot of posts like mine saying how bullish it all is, and posts like yours ditto, then it might be time for the real crash to start.

Can only hope, because prices are insane if you look at them sober.

But they could be hear to stay, 100 yrs ago average Joe did'nt OWN a house, they were for sale but he simply could'nt afford it, Why do sheeple now believe its their right to own a house, maybe it is just that anyone who has bought in the last 40-50 yrs was living in a golden time, which has now past.

I use the word maybe alot because I dont make predictions which it seems way too many on this site do!!

GLA

[Mammon]

Can only hope, because prices are insane if you look at them sober.

Or perhaps house prices are not insane based on all the money supply/credit inflation over the last 10 years.

Perhaps its the wages paid to the masses which are insanely low.

[0q0]

Or perhaps house prices are not insane based on all the money supply/credit inflation over the last 10 years.

Perhaps its the wages paid to the masses which are insanely low.

The homes are for the masses so their price does ultimately have to reflect masses' wages, the expansion of credit to the reckless levels seen in recent years has created the monster we still have. I would not want to bet on house prices staying at these levels, despite my current awareness that agents are busy and places are selling rapidly. It seems like a house of cards again, but one which for practical reasons (ie life is too short) some people are buying into anyway. It will be a dangerous stretch if I buy, many cuts will need to be made in other expenditure and even then I will be running a risk, so I will be feeling particularly annoyed with myself if the prices begin to make a proper slide back to reality shortly afterwards which is far more likely than any real HPI. 2002 high prices, 2005 ridiculously high prices, 2007 even more ridiculously high prices, but by 2010 an acceptance that "that's the way it is" by an economically semi-illiterate British buying public - very worrying indeed, sleepwalking into either great future hardships for buyers or taxpayers or a proper crash next time that will take prices down like Eire. But life can't be put on hold forever, that's why some bears capitulated, not because there's any sense in the valuations - there's anything but.

Edited January 16, 2010 by The Last Bear

[Dead Spider]

From article :

"Unfortunately, the RICS refuses to publish how many estate agents it surveys and the exact numbers saying what. "

That's incorrect . For example in the August 2009 report they stated quite plainly :

"Total number of survey contributors =266"

Out of around 100,000 surveyors .

[dances with sheeple]

Still now crash,I'm now not so sure we are going to have one, Government don't wont one, Sheeple don't wont one, Banksters don't wont one no appitite for one, House prices I believe will be held at all costs. The few that are waiting for cheaper house prices could be in for a long wait.

How are they going to pull it off?

[0q0]

From article :

"Unfortunately, the RICS refuses to publish how many estate agents it surveys and the exact numbers saying what. "

That's incorrect . For example in the August 2009 report they stated quite plainly :

"Total number of survey contributors =266"

Out of around 100,000 surveyors .

I think I'm right in saying two thousand is the recommended sample usually for accuracy reasons.

[Dead Spider]

I think I'm right in saying two thousand is the recommended sample usually for accuracy reasons.

Sounds logical .

Rics only asked 264 in December 2009 .

So in December , 77 people thought prices had risen .

I don't think I'll base a huge purchase on an opinion base that small .

[spivT]

Sounds logical .

Rics only asked 264 in December 2009 .

So in December , 77 people thought prices had risen .

I don't think I'll base a huge purchase on an opinion base that small .

did you take the same view when the RICS survey showed more reporting that prices had fallen or weren't rising, in the early part

of the year and tailend of last ?

Or was the methodology ok back then ?

[Si1]

did you take the same view when the RICS survey showed more reporting that prices had fallen or weren't rising, in the early part

of the year and tailend of last ?

what?

[Dead Spider]

did you take the same view when the RICS survey showed more reporting that prices had fallen or weren't rising, in the early part

of the year and tailend of last ?

Or was the methodology ok back then ?

I've never paid much if any attention to the RICS survey .

Prefer the Land Registry survey and I don't trust that either (no repo's included and I've reported so many agreed errors there must be many more) .

[spivT]

what?

the reason you don't understand this time is because you have your head buried in the sand. that's a metaphor

for people on this site who don't want to accept the trend of the last six months may continue into 2010, and who

especially don't want to consider that a nominal bottom may have already been reached. come and gone.

open your mind to the idea that RICS data is indicating an upward trend from the lows in the early part of the year.

And that it should not be dismissed becuase you don't like the news.

[Si1]

the reason you don't understand this time is because you have your head buried in the sand. that's a metaphor

for people on this site who don't want to accept the trend of the last six months may continue into 2010, and who

especially don't want to consider that a nominal bottom may have already been reached. come and gone.

open your mind to the idea that RICS data is indicating an upward trend from the lows in the early part of the year.

And that it should not be dismissed becuase you don't like the news.

6 months does not a trendeth make.

I don't like the fundamentals.

following a graph without understading this is for fools.

Edited January 16, 2010 by Si1

[Fairies Wear Boots]

Still now crash,I'm now not so sure we are going to have one, Government don't wont one, Sheeple don't wont one, Banksters don't wont one no appitite for one, House prices I believe will be held at all costs. The few that are waiting for cheaper house prices could be in for a long wait.

Same could be said for any crash. But they still happened. Government doesn't want to slash the public sector, nor does most of the public, nor the public sector, but they're going to have to do it after the next election.

The government would also like to be able to keep the base rate where it is. Good luck with that.