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TheCountOfNowhere

The Unnatural Look Of The Front Page Graph.

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It strikes me now when I look at this:

homepage.png

How unnatural the "bounce" of 2013-2014 looks and how sharp it is.

That bounce seems to coincide nicely with Carney taking over, the MSM hype at the start of 2014 and the realisation for the punters that you could borrow again under the FLS scheme.

It also looks like a peak all in it's own right.

I wonder how it will look in 12 months time.

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I bought a very average 3 bed house in 1980 for £23000.

I had a very average wage of around £6000 with company car and expenses.

today, those self same houses are £180K

8.5 times price growth.

with wages at 4 times growth. in the same timescale.

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Since the new format on this forum I don't seem to be able to include quotes or links but the headline to the article in the Telegraph "UK Homeowners start to panic sell in the face of house price uncertainty" is the type of headline we have dreamed of for years and is the type of catalyst we need.

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What is more strange about this chart is the trend line. Surely if it is the real house prices, it has already been adjusted for inflation, so instead of the trend going up by 2.9% a year, it should just be a flat line. Am I missing something?

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Since the new format on this forum I don't seem to be able to include quotes or links but the headline to the article in the Telegraph "UK Homeowners start to panic sell in the face of house price uncertainty" is the type of headline we have dreamed of for years and is the type of catalyst we need.

Well done for seeing that, woirth a thread all of it's own:

http://www.telegraph.co.uk/finance/newsbysector/constructionandproperty/11015301/UK-homeowners-start-to-panic-sell-in-the-face-of-house-price-uncertainty.html

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I bought a very average 3 bed house in 1980 for £23000.

I had a very average wage of around £6000 with company car and expenses.

today, those self same houses are £180K

8.5 times price growth.

with wages at 4 times growth. in the same timescale.

Interest rates have more than halved, so you would be able to pay twice as much and the monthly payments would still be affordable.

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Interest rates have more than halved, so you would be able to pay twice as much and the monthly payments would still be affordable.

Still have to pay back the principal though. £250k of principal over 25 years is a lot of money for an ordinary household to find in an age of flat/falling nominal wages.

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What is more strange about this chart is the trend line. Surely if it is the real house prices, it has already been adjusted for inflation, so instead of the trend going up by 2.9% a year, it should just be a flat line. Am I missing something?

I have always thought that and mentioned it on this forum about 8 years ago, it is impossible to have that trendline on this graph.

It would be bad enough just going up in a straight line as that would mean it is increasing over the rate of inflation permanently. I would think that it needs to change at some point and either flatline or start going down again. The line could probably point upwards for as long as interest rates are going down and they have been for most of the graph. Now interest rates can't go down further so the trendline has to flatten out.

The other really funny thing for people on this site is that we are nicely below the trendline now so it's up up and away from here!

:D

Edited by planit

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The other really funny thing for people on this site is that we are nicely below the trendline now so it's up up and away from here!

:D

Unfortunately, wages say different.

The only thing that has increased with inflation is the amount of debt we're in.

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Since the 2007/2008 economic/house price collapse the most they've been able to massage is two relatively short lived upticks in the chart. Both being general election related with the first one being in the run-up to the 2010 election (Brown's boomlet).

Now it's Osborne's pre-election mad mega bubble in London - throwing everything including the kitchen sink into it all at once.

Even Brown's boomlet was fading before the 2010 general election and it's currently looking as if Osborne's attempt is starting to fade even sooner - unless he finds a spare kitchen sink that is.

Edited by billybong

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I have always thought that and mentioned it on this forum about 8 years ago, it is impossible to have that trendline on this graph.

It would be bad enough just going up in a straight line as that would mean it is increasing over the rate of inflation permanently. I would think that it needs to change at some point and either flatline or start going down again. The line could probably point upwards for as long as interest rates are going down and they have been for most of the graph. Now interest rates can't go down further so the trendline has to flatten out.

The other really funny thing for people on this site is that we are nicely below the trendline now so it's up up and away from here!

:D

It;s not impossible, it just shows that for the entire second half of the 20th and early 21st century having your money in property got you a better return than cash.

If you look at nominal prices they're exponential.

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I think a 'small' rise in rates would give confidence to the markets and allow Osborne to carry on for a while.

Agree.

A small rate rise would unequivocally put the UK/BofE/Carney at the top of the league table for confidence of global bond investors. Which would mean less scrutiny from global bond/FX markets and give him lots of wiggle room. If he can, he will do something small. Problem is, if the bottom has dropped out of London/SE Property market he doesn't have that luxury.

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