The Chart That Says It All About Hpc...

[Roost]

Graph

-20% YoY in 2012 certainly looks feasible... Would love to hear your thoughts.

[exiges]

I get page not found

[Ash4781]

Not what you want to see when you're buying a place lol

Edited May 10, 2011 by Ash4781

[Timm]

Graph

-20% YoY in 2012 certainly looks feasible... Would love to hear your thoughts.

Hard to tell yet if that is an inflection point moving away from the bears, or a full blown bull-trap: 2008 style.

As I'm looking to buy, it's obviously going to be a bull trap.

[beccles]

I get page not found

[billybong]

Interesting the way they've provided a floor on the chart at about - 18%. As if a fall in prices greater than that would be almost unimaginable so no need to provide room for it on the chart.

Extending the line connecting the lows there could be getting on for 30% falls - I don't think that's very likely for 2011 but who knows for 2012 and 2013 and as prices fall 30% of a smaller price is a relatively smaller amount so becomes more feasible

Edited May 10, 2011 by billybong

[mfp123]

this is a far more significant chart in terms of price sustainability:

zero inflation on house prices is around the 80k sales per month.

were currently around 30-40k a month.

[bigsmelly]

this is a far more significant chart in terms of price sustainability:

zero inflation on house prices is around the 80k sales per month.

were currently around 30-40k a month.

Is there any way to adjust that chart with reference to interest rates at the time of measurement?

[_w_]

Nobody asked for it but here's my twopence on Moneyweek:

I've been wondering how they managed to be so wrong for so long and still not change course.

My guess is their target market is the typical saver who also happens to be the typical hpc reader.

And as a commercially minded business they write what that target market wants to hear.

Unfortunately while you enjoy these made to measure speculations you are not looking at the real world. Worse, they will distort your understanding of the world by reinforcing your pre-existing bias.

Or in other words, Moneyweek may be dangerous to your wealth.

[koala_bear]

Interesting the way they've provided a floor on the chart at about - 18%. As if a fall in prices greater than that would be almost unimaginable so no need to provide room for it on the chart.

Extending the line connecting the lows there could be getting on for 30% falls - I don't think that's very likely for 2011 but who knows for 2012 and 2013 and as prices fall 30% of a smaller price is a relatively smaller amount so becomes more feasible

Since it is YoY falls not fall from peak I would be surprised if we got more than 15% but more realistically 10% YoY falls for several years - it is very difficult to get bigger falls than this.

[koala_bear]

Nobody asked for it but here's my twopence on Moneyweek:

I've been wondering how they managed to be so wrong for so long and still not change course.

My guess is their target market is the typical saver who also happens to be the typical hpc reader.

And as a commercially minded business they write what that target market wants to hear.

Unfortunately while you enjoy these made to measure speculations you are not looking at the real world. Worse, they will distort your understanding of the world by reinforcing your pre-existing bias.

Or in other words, Moneyweek may be dangerous to your wealth.

Agreed and if you have all your worth tied up in a house how much would you have available to invest in opportunities you might see in moneyweek?

[ccc]

Interesting the way they've provided a floor on the chart at about - 18%. As if a fall in prices greater than that would be almost unimaginable so no need to provide room for it on the chart.

Extending the line connecting the lows there could be getting on for 30% falls - I don't think that's very likely for 2011 but who knows for 2012 and 2013 and as prices fall 30% of a smaller price is a relatively smaller amount so becomes more feasible

Perhaps they possibly did this to contain the ludicrous ~30% rises seen at the start of it within a nice sized chart ?

Either way to trend is very clear. It's a bouncing ball heading down the stairs. LIttle bumps up here and there - but only heading one direction.

[_w_]

Agreed and if you have all your worth tied up in a house how much would you have available to invest in opportunities you might see in moneyweek?

As a typical saver myself, a long time ago I was very attracted to Moneyweek. The problem is that the nature of their forecasts, timing and quality of analysis have been systematically below par in my experience. Their attraction comes from the emotional reactions they trigger in savers, not from the maturity or depth of their analyses.

[Lagarde's Drift]

I used to buy it to perv on MSW and read the property porn at the back. The financial advice is nonsense (in the way that sound advice given badly is).

[The Knimbies who say No]

this is a far more significant chart in terms of price sustainability:

zero inflation on house prices is around the 80k sales per month.

were currently around 30-40k a month.

That's an excellent chart. It would be good to see it updated post 2005 to see if these points fit with the trend.

[rantnrave]

Agreed and if you have all your worth tied up in a house how much would you have available to invest in opportunities you might see in moneyweek?

Or even subscribe to MoneyWeek?

[rantnrave]

The moggie has stopped moving...

[Van]

What is also true is that the YoY % change is a trailing moving average - i.e. it will lag turning points and smooth out the peaks and troughs. So, yes, prices have been in decline since last summer, but we may be just a little closer to the bottom that those charts suggests.

[billybong]

Since it is YoY falls not fall from peak I would be surprised if we got more than 15% but more realistically 10% YoY falls for several years - it is very difficult to get bigger falls than this.

I agree that's a distinct possibility but on the subject of what's likely or difficult in the mid to late nineties most people would have thought the 30% to 20% YoY increases shown on the chart 2002 -2004 would be most unlikely and perhaps even impossible in those days. These days the future of the UK economy and perhaps even the UK itself is more uncertain than for a very long time.

Edited May 10, 2011 by billybong

[The Masked Tulip]

Nobody asked for it but here's my twopence on Moneyweek:

I've been wondering how they managed to be so wrong for so long and still not change course.

My guess is their target market is the typical saver who also happens to be the typical hpc reader.

And as a commercially minded business they write what that target market wants to hear.

Unfortunately while you enjoy these made to measure speculations you are not looking at the real world. Worse, they will distort your understanding of the world by reinforcing your pre-existing bias.

Or in other words, Moneyweek may be dangerous to your wealth.

+1 - alas, I only worked that out a few months ago. Took me several years.

[scottbeard]

Interesting the way they've provided a floor on the chart at about - 18%. As if a fall in prices greater than that would be almost unimaginable so no need to provide room for it on the chart.

Extending the line connecting the lows there could be getting on for 30% falls - I don't think that's very likely for 2011 but who knows for 2012 and 2013 and as prices fall 30% of a smaller price is a relatively smaller amount so becomes more feasible

1. The floor of -18% is because that's the lowest observed. They also have a ceiling of +30%, but not because that's the highest possible.

2. Extend the line connecting the lows for long enough and you'll get -100%. That doesn't mean that -100% (or -30%) is going to happen.

It looks an interesting chart, but someone has obviosuly chosen their start point very wisely for effect. Why does it start randomly half way through 2002? Because that's what helps their spin.

Start it in 1945 and then let's see the long term patterns.

[neil324]

Interesting chart, looks to me like lower highs and lower lows, so maybe the falls of 2008 will be beaten on the next leg down.

[James Wyatt]

If you want to see a 'good chart' go to voxeu and read Carmen and Vincent Reinhart's paper on "The Decade after the fall" herewith is the link and the best graph is the one at the end albeit just covers post WWII collapses.

http://www.voxeu.org/index.php?q=node/5499

Real housing prices for the full period is available for ten of the fifteen financial crisis episodes. For this group, over an eleven-year period (encompassing the crisis year and the decade that followed), about 90% of the observations show real house prices below their level the year before the crisis. Median housing prices are 15% to 20% lower in this eleven-year window, with cumulative declines as large as 55%. The observations on unemployment and house prices, of course, may be related, as a protracted slump in construction activity that accompanies depressed housing prices may help to explain persistently higher unemployment.

Figure 3. Real house prices before and ten years after severe financial crises: Ten post-WWII episodes

Probability density function: Advanced economies

Sources: Reinhart and Reinhart (2010) and sources cited therein.

Another important driver of the cycle is the leverage of the private sector. In the decade prior to a crisis, domestic credit/GDP climbs about 38% and external indebtedness soars. Credit/GDP declines by an amount comparable to the surge (38%) after the crisis. However, deleveraging is often delayed and is a lengthy process lasting about seven years. The decade that preceded the onset of the 2007 crisis fits the historic pattern. If deleveraging of private debt follows the tracks of previous crises as well, credit restraint will damp employment and growth for some time to come.

Another important driver of the cycle is the leverage of the private sector. In the decade prior to a crisis, domestic credit/GDP climbs about 38% and external indebtedness soars. Credit/GDP declines by an amount comparable to the surge (38%) after the crisis. However, deleveraging is often delayed and is a lengthy process lasting about seven years. The decade that preceded the onset of the 2007 crisis fits the historic pattern. If deleveraging of private debt follows the tracks of previous crises as well, credit restraint will damp employment and growth for some time to come.[/i]

[goldbug9999]

Nobody asked for it but here's my twopence on Moneyweek:

... they will distort your understanding of the world by reinforcing your pre-existing bias.

Or in other words, Moneyweek may be dangerous to your wealth.

Very, infact the HPC forum is somewhat dangerous to ones wealth in general. I would advice anyone here to temper the extreme views and articles quoted on here with some more mainstream opinion such as the FT (who actually have a very good track record of predicting trends, crashes, booms etc ...).

[cashinmattress]

name='goldbug9999' timestamp='1305108916' post='2983956']

Very, infact the HPC forum is somewhat dangerous to ones wealth in general. I would advice anyone here to temper the extreme views and articles quoted on here with some more mainstream opinion such as the FT (who actually have a very good track record of predicting trends, crashes, booms etc ...).

link FT predictions for 2007....

Will the UK house market crash? Wrong

No. In assessing the chances of a crash, one has to ask two questions. The first is whether the market is at present overvalued.

A sophisticated analysis by David Miles of Morgan Stanley does indicate that there is a large speculative element in current prices. That suggests prices will fall at some point.

The second question is whether a fall is likely next year. Any sudden fall would be likely to be in response to some shock. The obvious shock would be a sharp rise in interest rates, ­probably in response to a rapid rise in expected inflation. That seems improbable next year.

If a shock is indeed unlikely, it becomes more likely that the boom will end with a whimper rather than a bang – a period of stable prices before they start falling over a lengthy period. Such a reversal is also unlikely to emerge inside less than a year, given the present buoyancy of the market.

FT and plenty of others got it dead wrong, on the market, Lehman Bros, etc...

Schiff, Keiser, Taleb, and lots of others got it right, but they never got much airplay or paper coverage.

Turkeys, Christmas, etc...

Edited May 11, 2011 by cashinmattress