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Alfie Moon

Daily Mail Reader Thinks House Prices Are At Long Term Trend Level

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From the following Daily Mail (re the proposed rise in CGT) article:

http://www.dailymail.co.uk/news/article-1282051/Cameron-moves-quell-capital-gains-tax-revolt.html

One Readers Comment is as follows:

"Dave of Birmingham

Er, which long term trend in house prices are you referring to ?

The 9% rise pa since 1975 ?

I think you will find we are bang on trend if you check out Nationwides Real House Prices graphs.

Selfish moi ? - a nurse.

- JKCR, dumfries scotland, 28/5/2010 13:58"

JKCR believes that current house prices are at their long term trend levels. Could as many HPC'ers follow the Daily Mail link to add Readers Comments to put JKCR right about this?

Our Readers Comments will be read by large numbers of people - the DM, unfortunately, has a high number of readers.

Thanks

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If a Daily Mail reader wakes up and discovers the milk on their doorstep pecked open and fouled, they think it was an illegal immigrant wot dun it.

On all international measures the UK house prices are way above the trend line. The trend line average has been seen since 1999. I don't care what the figures are currently. The anecdotal eveidence is that houses are much more than any of these graphs show. In sussex an ordinary terraced house is on average about £200k still over 6 x an average income. A semi is up to 10x. Incomes in the private sector have fallen for many already. Only the cushioned public sector has yet to adjust to the financial reality. In the north the mutiples are less, so averages don't tell the whole story.

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The nationwide national trend line ( which it apears house prices are pretty much on) and judging whether they are overvalued are not necessarilly the same thing... the nationwide trend line merely reflects past movements adjusted for inflation..... if prices had risen for so long so high then the trend line would be in a different place.

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What a rediculous comment. Typically a trend line will take the recent low points and join them together to for an upward trendline for a bull market, and the recent high points and join them together to form a downward trendline. To create a trendline you don't just draw an arbitary line through the data and call it a trendline. The line they have shown is at best a moving average, and a smoothed one at that. now this tells another story altogether. When a long term moving average is broken to the downside, it usually signals a major drop off in price, Mr daily mail reader really needs to learn his technical analysis.

In this case you could take the lows from 1982 and 1996 to create a trend line which would give you a price of about £106000 today (approx) if prices were to revert to trend. Actually, a basic calcualtion shows that the mean price over the last 35 years is roughly £100000.

If you cared to draw the downward trendline from the peak in 2007ish to the "bull trap" in 2009, if this trendline is followed (they frequently are) then we may well see our return to long term trend, ie £106000 aprox average house price by about 2013 - 2014.

Granted this is subjective in the manner it is calculated, but I would say it is in the correct region in terms of time and price, give or take 10k and a year.

Edited to add a badly drawn graph

homepage.png

Edited by Lord Lister

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What a rediculous comment. Typically a trend line will take the recent low points and join them together to for an upward trendline for a bull market, and the recent high points and join them together to form a downward trendline. To create a trendline you don't just draw an arbitary line through the date and call it a trendline. The line they have shown is at best a moving average, and a smoothed one at that. now this tells another story altogether. When a long term moving average is broken to the downside, it usually signals a major drop off in price, Mr daily mail reader really needs to learn his technical analysis.

In this case you could take the lows from 1982 and 1996 to create a trend line which would give you a price of about £106000 today (approx) if prices were to revert to trend. Actually, a basic calcualtion shows that the mean price over the last 35 years is roughly £100000.

If you cared to draw the downward trendline from the peak in 2007ish to the "bull trap" in 2009, if this trendline is followed (they frequently are) then we may well see our return to long term trend, ie £106000 aprox average house price by about 2013 - 2014.

Granted this is subjective in the manner it is calculated, but I would say it is in the correct region in terms of time and price, give or take 10k and a year.

Edited to add a badly drawn graph

homepage.png

Don't be so hard on yourself looks lovely to me :)

Edited for spelling as some analy retentive knob will comment :D

Edited by Agent Provocateur

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Don't be so hard on yourself looks lovely to me :)

Edited for spelling as some analy anally retentive knob will comment :D

:lol:

Edited by Goat

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Oh and I forgot to add that old addage, "the bull climbs the stairs, the bear falls out the window" well the bear has leaned out, slipped, got his braces caught, bounced a little but I think I may have heard the sound of snapping elastic.

What a rediculous comment. Typically a trend line will take the recent low points and join them together to for an upward trendline for a bull market, and the recent high points and join them together to form a downward trendline. To create a trendline you don't just draw an arbitary line through the data and call it a trendline. The line they have shown is at best a moving average, and a smoothed one at that. now this tells another story altogether. When a long term moving average is broken to the downside, it usually signals a major drop off in price, Mr daily mail reader really needs to learn his technical analysis.

In this case you could take the lows from 1982 and 1996 to create a trend line which would give you a price of about £106000 today (approx) if prices were to revert to trend. Actually, a basic calcualtion shows that the mean price over the last 35 years is roughly £100000.

If you cared to draw the downward trendline from the peak in 2007ish to the "bull trap" in 2009, if this trendline is followed (they frequently are) then we may well see our return to long term trend, ie £106000 aprox average house price by about 2013 - 2014.

Granted this is subjective in the manner it is calculated, but I would say it is in the correct region in terms of time and price, give or take 10k and a year.

Edited to add a badly drawn graph

homepage.png

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It is probably an easy misunderstanding of the trend line on the graph of hpc home page.

The trend line on that graph is most influenced by the recent ridiculous bubble. It is a reflection of the bubble which has yet to deflate. It is not long term. I presume it is a regression line, which is the line of closest fit using the principle of least squares. When the bubble deflates the trend line will be dragged down on the right hand side to follow the deflating bubble. It will then be a lot flatter and the present prices will be seen as being well above the trend line.

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It is probably an easy misunderstanding of the trend line on the graph of hpc home page.

The trend line on that graph is most influenced by the recent ridiculous bubble. It is a reflection of the bubble which has yet to deflate. It is not long term. I presume it is a regression line, which is the line of closest fit using the principle of least squares. When the bubble deflates the trend line will be dragged down on the right hand side to follow the deflating bubble. It will then be a lot flatter and the present prices will be seen as being well above the trend line.

Now now Joe, stop using facts to try to bring rational thinking to data. You know the trend line is a prediction based on the number of pints of beer drunk by journalists on a friday night. All that statistics stuff. Whatever next? Pearson's correlation coefficient? Knowing what you're talking about never got anybody anywhere.

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  • 140 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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