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brotherjoe

The 'real House Price Graph' On The Home Page

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When I look at the Nationwide graph on the home page it appears to show the average house price began falling in 2007 and is now sitting on the curved red line which I assume is supposed to represent the long term average?

If that is correct how is it that the income multiple to mortgage advance is still so much higher than the long term? Has it moved higher?

If that graph is correct then all thats left to come is the over-shoot amount?

What am I missing?

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The long term average has been dragged up by rampant HPI and will fall along with house prices.

The red line is, I believe, a 'line of closest fit', using 'linear regression' which is an algorithm to make the red line fit the graph as closely as possible. (It uses the sum of squares of the distance between the line and the graph, and tries to minimize this sum of squares.) When hp starts to fall the red line will be dragged down to follow it, as Bruce Banner writes.

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The red line is, I believe, a 'line of closest fit', using 'linear regression' which is an algorithm to make the red line fit the graph as closely as possible. (It uses the sum of squares of the distance between the line and the graph, and tries to minimize this sum of squares.) When hp starts to fall the red line will be dragged down to follow it, as Bruce Banner writes.

Interesting - i've been wondering about that graph for a while coz people have been forced to take either a wage freeze or in many cases wage cuts in the past year.

With the hidden rampant inflation going on (never mentioned in the media or by Govt for past two yrs+ whilst food companies and supermarkets sell us goods with less weight or items in them) was wundering if this affects the graph too as peoples wages buy less and less.

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Interesting - i've been wondering about that graph for a while coz people have been forced to take either a wage freeze or in many cases wage cuts in the past year.

With the hidden rampant inflation going on (never mentioned in the media or by Govt for past two yrs+ whilst food companies and supermarkets sell us goods with less weight or items in them) was wundering if this affects the graph too as peoples wages buy less and less.

No need for wondering about anything. The fact is the mortgage market has seized up as wages, deposits required and the rules on actually be able to prove an income have a caused a nose dive. This will be shortly followed by IR rises beginning in the spring/summer. The multiples needed to buy houses on so called average incomes just make you wince. The graph has been steadily moved up over a very long period and is no longer an accurate reflection of the longer term average. It reflects a period when borrowing was too easy, on multiples that made no long term sense.

This site has been full of poeple pining that despite out doing their parents educational achievements, their home buying power has been strangely well below that which they had experienced as a child. The fact that high house prices have been easily allowed to masquerade as real wealth has now been shown up as a sham. We have diminished our world competitiveness and swapped a productive manufacturing economy for a phony money banks mirage. AND even now they want to hold us all to ransom, claiming their business, producing high income for govt to tax, will go elsewhere if we don't leave their bonuses alone. Bahhh Humbug. They are the other cause of our trouble! Derivatives! Pah, more like explosives in economic terms.

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  • 284 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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