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Nationwide Data - Hper Statistics

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Probably been done before (to death).....

But I've been having a play with the Nationwide figures available from their very own website.

Only really been looking at SW England.

Some very interesting data (not yet plotted much of it).

The HPER (house price to earnings) data looks very interesting.

See attched graph..... can you predict where it goes next?

We'll either need rampant wage inflation or a house price crash :D

SW_HPER.jpg

post-692-1130945804_thumb.jpg

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Probably been done before (to death).....

But I've been having a play with the Nationwide figures available from their very own website.

Only really been looking at SW England.

Some very interesting data (not yet plotted much of it).

The HPER (house price to earnings) data looks very interesting.

See attched graph..... can you predict where it goes next?

We'll either need rampant wage inflation or a house price crash :D

Interesting Graph. It would be equally interesting to see a similar graph of average mortgage *cost* in relation to earnings - I believe around the time of the peak in your graph when rates were 15%+, the average FTBers mortgage was costing something like 37% of their gross earnings compared to more like 19% today. Wouldn't a graph of cost / earnings be a more accurate indicator of affordability?

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Probably been done before (to death).....

But I've been having a play with the Nationwide figures available from their very own website.

Only really been looking at SW England.

Some very interesting data (not yet plotted much of it).

The HPER (house price to earnings) data looks very interesting.

See attched graph..... can you predict where it goes next?

We'll either need rampant wage inflation or a house price crash :D

the graph isn't really a head and shoulders.........it's more like your standard "bubble goes pop" graph.

....these have a parabolic spike,a sharp but minor drop,and then a bounce to re-test the low point of the last high phase.....before failing,dropping sharply and crashing through the low (the previous bounce point) and still lower without even a re-test.

lots of bubbles have this kind of chart...it's a trademark,have a look at 90's property,80's nikkei and dotcom and you'll see the similarities.

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Interesting Graph. It would be equally interesting to see a similar graph of average mortgage *cost* in relation to earnings - I believe around the time of the peak in your graph when rates were 15%+, the average FTBers mortgage was costing something like 37% of their gross earnings compared to more like 19% today. Wouldn't a graph of cost / earnings be a more accurate indicator of affordability?

Welcome ohbottom,

This subject has been covered on this site before (you presumably won't have seen it as a newbie), you can search for affordability... or try this link:

"Affordability"

The problem with "affordability" is that it hides reality in a way that average house prices to average incomes cannot.

In theory, house prices can go up endlessly and as long as nobody actually buys at those silly prices (with the crushing debt this would entail) then the "affordability" of average mortgages does not change and, hey presto, house prices are at rational levels (at £1m each, £10m each, it really doesn't matter). Clearly nonsense I hope you would agree.

The fact that someone has a minimal mortgage because they bought 20 years ago tells you little about whether house prices are currently sustainable or not. A lot of people take false comfort from these "affordability" graphs.

FTBs are not generally buying today (hence HBOs etc will tell you they are priced out in 93% of our towns and cities etc) and many that do buy interest-only. I'd say both are clear signs that houses are NOT affordable rather than a sign that everything is just dandy.

Edited by London-loser

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If you want a graph of %age of disposable income spent on mortgage repayments then nationwide also have 'their' data for this series in their downloadable excel spreadsheets.

I haven't had the time to make a graph of them yet.

Might be interesting to plot it over the top of this graph, and then plot interest rates over the top of that.

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Interesting Graph. It would be equally interesting to see a similar graph of average mortgage *cost* in relation to earnings - I believe around the time of the peak in your graph when rates were 15%+, the average FTBers mortgage was costing something like 37% of their gross earnings compared to more like 19% today. Wouldn't a graph of cost / earnings be a more accurate indicator of affordability?

This is the ODPM graph - mortgage repayments as a fraction of gross earnings.

odpm_afford.gif

The remarkable thing is that both FTBs and OOs spend roughly a constant (and very similar) fraction of earnings irrespective of interest rates *except* when they are required to stretch during a bubble. This constancy observation is the core of the affordability argument - people really do appear see house prices in the abstract and only consider the 'cost' of the money.

The affordability argument leads to the conclusion that the current peak in house prices derives from two effects - the usual bubble dynamic, and also this rough inverse relationship between interest rates and prices - the bubble will deflate over about 5 years but the floor is set by future IRs. However, the real cost of this price-rates seesaw is that without significant earnings growth the repayments will remain high relative to income for *much* longer, so that the purchase eats up a larger fraction of future earnings leaving less to fund trading up at a later date. And the inevitable rebalancing of the seesaw as the IR reductions unwind will be painful.

post-2887-1127244991_thumb.jpg

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  • 302 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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