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Tester

Kirstie's Independant Price Forecasts

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I watched the appalling programme and wondered where their independant price forecasts came from.

Well, I've been playing email tennis with Mandy Bradley, Director of Technical Forecasts, Property Forecasts and I've come to the conclusion their forecasts may be less than reliable!

Do they analyse present and future economic conditions and apply complex mathematical models to determine the future direction of asset prices? Er ... No. They smooth the data since 1995, curve fit it, then extrapolate. Their words: "We are not property professionals". Genius!

Email trail here (Note: I'm not actually a FTB).:

>Sent: 27 April 2006 09:23

>To: Property Forecasts

>Subject: Enquiry from propertyforecasts.co.uk

>I have heard that interest rates are on the rise around the world and

>that property in the UK is 30% overvalued.

>

>Do you think the market will crash?

Michael Test

>From: "Mandy Bradley" <mandy.bradley@tfl.biz>

>Subject: RE: Enquiry from propertyforecasts.co.uk

>Date: Thu, 27 Apr 2006 12:52:26 +0100

>

>Hello Michael,

>Thank you for your interest in PropertyForecasts.co.uk, and for your

>very interesting query!

>Interest rates do seem to be on the rise - but in the UK at least, this

>is currently very marginal. For example, bank rates are still very low

>in comparison with where they were even 5 years ago.

>

>As regards a crash in the property market, we do not see any signs of

>this at present. There are two principal reasons for this:

>1) There is still huge pressure on property availability, as number of

>households increases with more singles setting up home, and more

>partnerships/marriages splitting.

>2) It is politically unacceptable for the Govt of the day to allow a

>situation to develop (again) where value of property drops abruptly.

>After the "crash" in the late 1980s-early '90s where property values

>did drop around 10% over 4 years, this was seen as disastrous. This

>10% drop over 4yrs was made up again within 5yrs so that by 1998 values

>were again above the peak seen in 1989, according to the Halifax index.

>

>Equally, I do not believe that property in this country is 30% over-valued.

>This was quoted as the case in 2001 (Sun Times, Jun '01), just before

>the market took off in a big way. The situation currently, as we see

>it, is that there are some areas and localities which may see a small

>drop, but there are many areas which will see property price rises over

>the next few years. Average price growth across England & Wales is

>forecast as around 5-6% for the coming year.

>

>It is very difficult for first-time buyers such as yourself to step

>onto the ladder, yet FTBs are the engine of the market: without them,

>the market stalls. All I can recommend is to be selective as to where

>you buy, and drive as hard a bargain as you can; as a FTB, you are in

>the very best position to do so.

>

>I wish you the very best of luck in your search - but please be

>reassured that we do not believe that the market is likely to drop like

>a stone, as you fear. We can't guarantee this, of course - but I think

>it would be a huge shock, with many unforeseeable consequences across

>the entire economy, if this happened.

>

>Once again, thank you for your interest in PropertyForecasts.co.uk.

>

>Best regards,

>

>Mandy Bradley

>Director

>Technical Forecasts Ltd

> Castle Court

> 12a High Street

> Arundel W Sx BN18 9AB

> UK

>

>phone: 0845 2 300 456

>web: www.propertyforecasts.co.uk

> www.tfl.biz

To: mandy.bradley@tfl.biz

Subject: RE: Enquiry from propertyforecasts.co.uk

Thanks for your reply.

Yes, I see the Nationwide is already increasing it's fixed rates which is a

bit worrying. I've always thought that if rates are historically low the

trend is more likely to be up than down!

It is great news that if prices go down then they will cycle back up again

in the future. Do you think it might be better to wait a while for prices to

go down some more before buying now close to the peak?

I thought that the Nationwide and Halifax were predicting rises of up to 3%

this year so I was wondering where you got your figure of 5-6% from?

I see you are in West Sussex ... so am I! According to the BBC prices in

West Sussex have been falling with Arundel particularly badly hit with

semi's dowm 6.8% over the quarter.

See:

http://news.bbc.co.uk/1/shared/spl/hi/in_d...s/html/45uf.stm

Thanks again for your reply.

Hello Michael,

We use Land Registry quarterly data, similar to that listed on the BBC

web-site.

Having said that, if you look at the historic plots on

www.PropertyForecasts.co.uk (the defaults, which include a 1-year forecast),

you will see that to look at one quarter's LandReg data compared with the

immediate previous one is dangerous in the extreme! Land Registry data -

especially at postcode sector level - is highly erratic, which is why we at

TFL go through extensive mathematical processing in order to smooth the

historic series, to the point where it becomes reasonably forecastable.

You ask for advice on when to buy: honestly, I cannot advise you. We use

mathematics to forecast; we are not property professionals, so legally I am

unable to offer an opinion which can be taken as advice to you as an

individual. I suggest that you look on our web-site at the historic prices

of the property type and location you are interested in, and see whether you

think on that basis that prices are likely to go up, down, or stay broadly

flat (whatever our forecasts say!)

And as for the 5-6% growth forecast? That is the averaged value of all

(smoothed) sector-level forecasts across England & Wales, as carried out by

ourselves (of course!). I repeat: we cannot guarantee any of our

forecasts, but I am attaching a totally independent survey from last Sept,

from a major City property company CB Richard Ellis - Hamptons International

joint venture, of forecasts for the 2004 property market, where TFL came out

quite well in comparison with rather larger, more well-known organisations.

(CML on the chart, by the way, is the Council of Mortgage Lenders).

Once again, I wish you the very best of luck in your purchase of property,

and thank you for your interest in PropertyForecasts.co.uk.

Best regards,

Mandy

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Seems like a fair response to me.

Good of them to spend the time to write it. As they say - they are forcasting based on trends and it could go either way.

Good to see them advising you to make your own decisions regardless of what their forcasts are - unlike K&P!!

Good work anyway

TB

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My point here is that millions may have watched that programme and believed in the dramatic price rises on the cards as they came from "independant forecasts".

Those forecasts are based on no more than curve fitting. I suggest that if the curve fitting was done from data commencing 1989 then slightly different results may have been produced!

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I suggest that if the curve fitting was done from data commencing 1989 then slightly different results may have been produced!

But that would assume a future structural change to the housing market similar to the ending of double tax relief that took place in 1989. What future similar scale structural change had you in mind that should be incorporated into the curve?

Edited by nodumsunreader

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My point here is that millions may have watched that programme and believed in the dramatic price rises on the cards as they came from "independant forecasts".

Those forecasts are based on no more than curve fitting. I suggest that if the curve fitting was done from data commencing 1989 then slightly different results may have been produced!

Well done Tester for getting to the crux of the claims made by Phil and Kirsty. Selective analysis I'd say by Property Forecasts.

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good work tester

hmmm - technical forecasts limited eh?

a brief look on companies house website shows me that they haven't submitted their last annual return which is now late. :(

if they cannot comply with a basic requirement (i.e. writing a cheque and signing a form) then one is left with some doubts as to the veracity of their "forecasts." :lol:

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But that would assume a future structural change to the housing market similar to the ending of double tax relief that took place in 1989. What future similar scale structural change had you in mind that should be incorporated into the curve?

How about the end of Mortgage Interest Relief for Buy to Let investors. But that could never happen ... could it?

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What a joke the property industry is.

You ask for advice on when to buy: honestly, I cannot advise you. We use

mathematics to forecast; we are not property professionals, so legally I am

unable to offer an opinion which can be taken as advice to you as an

individual.

Legally? There's no legality about it - property aint covered. K&P get away with it on a widely watched media front!

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  • 301 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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