BandWagon Posted March 12, 2006 Share Posted March 12, 2006 (edited) The graph shows interest rates (left scale), taken from the BOE, and house price to earnings ratio (right scale) from the latest Nationwide data. Enjoy... [edit: to change colours] Edited March 12, 2006 by BandWagon Quote Link to comment Share on other sites More sharing options...
Jason Posted March 12, 2006 Share Posted March 12, 2006 It just shows how vulnerable this country is to higher interest rates. Quote Link to comment Share on other sites More sharing options...
laurejon Posted March 12, 2006 Share Posted March 12, 2006 Thank you for that Graph. Tells me two things. 1. Why Burberry do not do trousers in Grey. 2. People make more money when interest rates are lowest. Quote Link to comment Share on other sites More sharing options...
Guest Riser Posted March 12, 2006 Share Posted March 12, 2006 Its interesting to see from your chart that the long term average for the Earnings Multiple is around 3.7 which agrees nicely with Nationwides current trend price of 112k which is around 3.7 X Average salary. Houses are currently 40% over valued and the momentum of the current correction will drive prices from Todays value of 157k down below the 122k trend value, this may take 5-5 years but it will come. Here is a plot I have posted before which shows that HPI follows 10 months behind interest rate changes, although these changes tend to be short term waves (approx 6 months) on the HPI tide which has a current period of around 14 years. If rates are held for the next six months I suspect we will see the effects of last August's rate cut fade away by early summer with HPI going negative later this year. A rate rise would really hit the market by the end of this year signaling a crash for 2007. 10month lag between Interest rate changes and HPI Quote Link to comment Share on other sites More sharing options...
BandWagon Posted March 12, 2006 Author Share Posted March 12, 2006 (edited) Great to see that blue line go negative shakerbabe. Amazing how housing lags interest rates by 10 months, but that seems to have broken down in the last year. Edited March 12, 2006 by BandWagon Quote Link to comment Share on other sites More sharing options...
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