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othello

Lies, Damned Lies And Statistics

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What do people believe the statistics that are churned out every month tell us? Nobody except the people who generate them know how they are put together. Nobody knows if they tell the truth. I challenge anybody to tell me what single metric tells us anything useful about the state of the market. It's a bit like drawing conclusions about the weather today based on the average rainfall across the country yesterday.

OK statistics have their place, but they should certainly not be taken as the primary indicator of what is happening in the market place. There have been many real examples posted here in recent weeks of price drops, asking prices falling, etc. There are also examples of prices rising.

The bottom line is that you will never get a picture of the market from statistics alone and a more intelligent approach is needed to get a true picture.

Edited by othello

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Or alternatively, you could accept that, for now, the market is still booming.

However an accelerating housing market against the backdrop of rising IRs is a danger signal if ever I saw one.

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The bottom line is that you will never get a picture of the market from statistics alone and a more intelligent approach is needed to get a true picture.

Well, I suppose there is always this approach (with thanks to d23 for providing such an excellent picture). :D

716A2DCA-BC21-C883-773FCF5BD9EE3395.jpg

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With the figures they are producing where they are still showing house prices to be rising, wont they essentially be showing house prices from say 3 months earlier when the house price was agreed between the vendor and the buyer? It takes maybe an average of 3 months to complete a house sale (especially when in a chain), so any effects of the recent interest rate increases will take some time to filter through.

Its difficult to say that the figures they are showing for last month are a true snapshot of current sentiment on house prices. It could be that house prices may have truly fallen but wont show in their figures until they complete the deal and show up on the figures for August, by which time the BOE has panicked on these figures and introduced further rate rises.

Just my little take on the situation as an amateur in all this

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The timeliest indicator of HPI and the state of the property market is the BoE approvals for house purchase number – it tells you what the indices will be reporting YoY over the next few months. IMHO this is both useful and informative. B)

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Yeah I agree with those above who have pointed out that this site has a tendancy to ignore, bury, or discredit any news that doesnt suit the argument. And then the same people get confused when the land registry numbers show prices are going up still. Personally, Ill believe there is a HPC when I walk into an EA and see cheap houses on offer. And not before ;)!

Couldn't agree more and the biggest 'lie' of all is that rubbish 'First-time buyers spend only 18% of their income on interest payments' as average house cost £210K!

I guess FTBs who buy now are actually finacially comfortable, either through having a good job, or like me, simply saved hard in my early 20s knowing that house purchase was something I wanted. I still believe that buying a house should take time and effort - why should the biggest purchase of ones life be "easy"!

I would also like to point out the blindingly obvious point that FTBs are unlikely to be buying the average house. I always thought it was normal to start with a cheaper one, normally a flat. In time, perhaps in your 30s, you get to buy a nice little house and then finally in your 40s you get to have that larger place you always wanted.

The problem is that the "have it now" generation cant quite cope with this and dislike the idea that they might have to compromise and buy a cheaper house. The above quote backs this up - it seems normal to this poster for an FTB to go straight in at the middle. My folks lived in some shocking places on their journey through life, yep - even in the good ol' days!

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Will people please give up on the "my parents did this and my parents did that" - they lived in a totally different time.

My 10000 times great grandfather lived in a cave and ate meat raw!

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Guest DissipatedYouthIsValuable
Builders share prices are transparent, up-to-date, and reflective of property sentiment in the UK.

They are also overwhlemingly Bearish

see: http://www.webspawner.com/users/ukbuild/index.html

You can choose to believe what you want. But I prefer facts, to an index composed of fruit salad and spin.

Thanks for that. Useful.

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What do people believe the statistics that are churned out every month tell us? Nobody except the people who generate them know how they are put together. Nobody knows if they tell the truth. I challenge anybody to tell me what single metric tells us anything useful about the state of the market. It's a bit like drawing conclusions about the weather today based on the average rainfall across the country yesterday.

OK statistics have their place, but they should certainly not be taken as the primary indicator of what is happening in the market place. There have been many real examples posted here in recent weeks of price drops, asking prices falling, etc. There are also examples of prices rising.

The bottom line is that you will never get a picture of the market from statistics alone and a more intelligent approach is needed to get a true picture.

...organisations who produce their own statistics should not be afforded the current credibility by the media to quote their own analysis unchallenged and broadcast it as news.....are the media so dum they allow this propaganda from people furthering their own agenda....

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Or alternatively, you could accept that, for now, the market is still booming.

However an accelerating housing market against the backdrop of rising IRs is a danger signal if ever I saw one.

Yes, I dont think anyone is expecting a "crash" at the moment because of the increasing demand, but the economy and debt levels are becoming very very worrying. It seems property is being used as the vehicle for this increasing debt. Will the boom in property/asset prices be seen as the reason for a very long and devastating depression in the UK? with many other countries effected to a lesser degree?

If interest rates hadnt increased over the last few years how high could prices have risen? My answer (as always :P ) is maximum affordibility which in theory could have seen property at around 3x current prices!!!!? would this really be possible? average house £600,000 +? :o

There are so many things for the people of England to be angry about, how long will it be before we see major stress fractures?

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Or alternatively, you could accept that, for now, the market is still booming.

However an accelerating housing market against the backdrop of rising IRs is a danger signal if ever I saw one.

Yes, I dont think anyone is expecting a "crash" at the moment because of the increasing demand, but the economy and debt levels are becoming very very worrying. It seems property is being used as the vehicle for this increasing debt. Will the boom in property/asset prices be seen as the reason for a very long and devastating depression in the UK? with many other countries effected to a lesser degree?

If interest rates hadnt increased over the last few years how high could prices have risen? My answer (as always :P ) is maximum affordibility which in theory could have seen property at around 3x current prices!!!!? would this really be possible? average house £600,000 +? :o

There are so many things for the people of England to be angry about, how long will it be before we see major stress fractures?

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The timeliest indicator of HPI and the state of the property market is the BoE approvals for house purchase number – it tells you what the indices will be reporting YoY over the next few months. IMHO this is both useful and informative. B)

Indeed, I have become quite a fan of assessing BoE mortgage approval rates.

See houseprices.uk.net graphs section for more info, esp the HPI% with 6month lag on YoY.

Incidentally, one of Nationwide's bulet points was that they expect 2007 to be 5-8% over the year. Jan-Jun was 5.35%. THEY are predicting things to slow down.

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Indeed, I have become quite a fan of assessing BoE mortgage approval rates.

See houseprices.uk.net graphs section for more info, esp the HPI% with 6month lag on YoY.

Incidentally, one of Nationwide's bulet points was that they expect 2007 to be 5-8% over the year. Jan-Jun was 5.35%. THEY are predicting things to slow down.

Do you think they could have been too bearish?

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Yeah I agree with those above who have pointed out that this site has a tendancy to ignore, bury, or discredit any news that doesnt suit the argument. And then the same people get confused when the land registry numbers show prices are going up still. Personally, Ill believe there is a HPC when I walk into an EA and see cheap houses on offer. And not before ;)!

I guess FTBs who buy now are actually finacially comfortable, either through having a good job, or like me, simply saved hard in my early 20s knowing that house purchase was something I wanted. I still believe that buying a house should take time and effort - why should the biggest purchase of ones life be "easy"!

I would also like to point out the blindingly obvious point that FTBs are unlikely to be buying the average house. I always thought it was normal to start with a cheaper one, normally a flat. In time, perhaps in your 30s, you get to buy a nice little house and then finally in your 40s you get to have that larger place you always wanted.

The problem is that the "have it now" generation cant quite cope with this and dislike the idea that they might have to compromise and buy a cheaper house. The above quote backs this up - it seems normal to this poster for an FTB to go straight in at the middle. My folks lived in some shocking places on their journey through life, yep - even in the good ol' days!

Look...

We have £800,000,000,000

Eight hundred billion… Pounds….More debt then we had pre-boom….

This has never been about the houses; this has been about selling this debt to people…

Never about anything more…

Houses and the expectation of House Price Inflation is merely how this debt was sold…

The carry trade, the trade in mortgage backed equity has meant that not only has this debt been sold once to you, but it has been sold again to countries abroad… The city has surged, the economy has revelled in the massive increase of the money supply…

And the debt has gone on selling…

We have been told by the ex chief of the MPC that they manufactured the boom with artificially cheep credit and that they did so to encourage massive levels of debt to increase consumer spending and pay our way out of a recession.

We know that every boom since records began for the human race has bust.

Everyone…

Now, Sir Isaac Newton felt the proverbial apple fall onto his head and had that flash of inspiration about gravity and he is revered the world across as one of the more important scientists we have had…

Name a famous economist…?

There are less of them, and why? (I hear you not ask, but I shall try to explain anyway so tough)

“Why” is because had there been an economist below that tree that had been hit by an apple he would still be sat there throwing the apples back in the air and calling his theory “Davity” or some such name…

His theory would be that one day the apple would be thrown back in the air and not come down again… Just watch… Just because it had come down every single time he had tried it does not mean that it will next time…

A true scientist would have got the point a while ago…

Newton got hit in the head once, got the picture… Economists for the most part get hit in the head every time and still have not grasped the point…

It’s the economic cycle; there have never been any exceptions…

The MPC have admitted that they have played the great unwashed like a cheep violin…

And you come on here and use the argument that it has always been hard, and that people should not expect a huge house…

Prices have trebled…. That is a boom…

It is embarrassing that educated and observant people will be surprised by what happens next

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This has never been about the houses; this has been about selling this debt to people…

Never about anything more…

Houses and the expectation of House Price Inflation is merely how this debt was sold…

You are so right about this. Which is why they will struggle to keep the boom going as people are maxed out on debt. In many respects the newbie BTL's are victims as they were required to expand the base of the City pyramid when sensible FTB's said "no deal."

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My 10000 times great grandfather lived in a cave and ate meat raw!

Yeah, well things are different now mate.

Caves are in short supply these days. And what with China and bio-fuels we just can't spare the land for your fancy steak tartar malarky.

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Look...

We have £800,000,000,000

Eight hundred billion… Pounds….More debt then we had pre-boom….

This has never been about the houses; this has been about selling this debt to people…

Never about anything more…

Houses and the expectation of House Price Inflation is merely how this debt was sold…

The carry trade, the trade in mortgage backed equity has meant that not only has this debt been sold once to you, but it has been sold again to countries abroad… The city has surged, the economy has revelled in the massive increase of the money supply…

And the debt has gone on selling…

We have been told by the ex chief of the MPC that they manufactured the boom with artificially cheep credit and that they did so to encourage massive levels of debt to increase consumer spending and pay our way out of a recession.

We know that every boom since records began for the human race has bust.

Everyone…

Now, Sir Isaac Newton felt the proverbial apple fall onto his head and had that flash of inspiration about gravity and he is revered the world across as one of the more important scientists we have had…

Name a famous economist…?

There are less of them, and why? (I hear you not ask, but I shall try to explain anyway so tough)

“Why” is because had there been an economist below that tree that had been hit by an apple he would still be sat there throwing the apples back in the air and calling his theory “Davity” or some such name…

His theory would be that one day the apple would be thrown back in the air and not come down again… Just watch… Just because it had come down every single time he had tried it does not mean that it will next time…

A true scientist would have got the point a while ago…

Newton got hit in the head once, got the picture… Economists for the most part get hit in the head every time and still have not grasped the point…

It’s the economic cycle; there have never been any exceptions…

The MPC have admitted that they have played the great unwashed like a cheep violin…

And you come on here and use the argument that it has always been hard, and that people should not expect a huge house…

Prices have trebled…. That is a boom…

It is embarrassing that educated and observant people will be surprised by what happens next

.......people with high loan to value ratios are about get wet......!

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Do you think they could have been too bearish?

Actually, I got it wrong. I used December's figure, it's actually 6.26%. See the other thread for more details, but I don't think they are being too bearish, I think that's about right from Spline's graph. Probably on the lower side of their estimate, although the graph is a little bit difficult to predict things with any more than certainty than saying it's going to be between 5 and 8%. I look forward to tomorrow's BoE figures.

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Will people please give up on the "my parents did this and my parents did that" - they lived in a totally different time.

My 10000 times great grandfather lived in a cave and ate meat raw!

ROFL!

literally, just fell of me chair....

F

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Guest d23
What do people believe the statistics that are churned out every month tell us? Nobody except the people who generate them know how they are put together. Nobody knows if they tell the truth. I challenge anybody to tell me what single metric tells us anything useful about the state of the market. It's a bit like drawing conclusions about the weather today based on the average rainfall across the country yesterday.

OK statistics have their place, but they should certainly not be taken as the primary indicator of what is happening in the market place. There have been many real examples posted here in recent weeks of price drops, asking prices falling, etc. There are also examples of prices rising.

The bottom line is that you will never get a picture of the market from statistics alone and a more intelligent approach is needed to get a true picture.

RB July 2006: Funny how the Land Registry figures are only "discredited" by the Bulls and Trolls?"

If the LR index had shown drops it'd be held up as a paragon of unbiased, rigorous statistical analysis

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I think Dr. Bubb's lead indicator is the most accurate reflector of the true state of the market: building stocks.

Why? Because these lads are in the front line of sales and know what they are getting for their product. They don't need to mix adjust, seasonally adjust, massage adjust, like for not like etc etc. Just the bottom line--are they getting less or more for the same type of house in the same location.

IMO the worst indicator is anything that uses "like for (not necessarily) like" sales when the reality is that they are comparing the price at which a house resold for without knowing how much the vendor put into the property since the previous sale. This appears to be the core of the massaged LR data which renders it useless other than for VI propaganda purposes.

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Guest d23
This appears to be the core of the massaged LR data which renders it useless other than for VI propaganda purposes.

RB July 2006: Funny how the Land Registry figures are only "discredited" by the Bulls and Trolls?"

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If the LR index had shown drops it'd be held up as a paragon of unbiased, rigorous statistical analysis

But the LR figures are showing drops--almost everywhere, especially in the Midlands:

AV PRICE (£) QUARTER ANNUAL SALES

Herefordshire

£215,591 0.2% 3.3% 697

Shropshire

£202,704 1% 9.8% 1016

Worcestershire

£201,359 -2.3% 8.9% 2333

Warwickshire

£200,075 -4.1% 8.2% 2419

Staffordshire

£170,380 -1.9% 5.7% 3174

West Midlands

£151,869 -2.9% 3.4% 9616

Wrekin

£148,342 -0.4% 5.3% 631

Stoke-On-Trent

£95,362 -4.7% 6.1% 1219

Sources:

England and Wales

Land Registry of England and Wales. The information above is based on figures provided by the Land Registry of England and Wales. Figures for England and Wales are for the period January to March 2007.

Now the "adjusted" LR data which takes so-called like for like sales tells the opposite story. This is because they are taking houses that have resold without taking into account the long running property improvement mania where people have spent thousands "doing up" before re-selling.

The above raw data takes into account a very very large sample size--thousands, and compares QoQ. Fair and accurate IMO. Sorry its not bullish but there you are.

The tide has turned I am afraid and like it or not the market is falling and the miracle is over.

Edited by Realistbear

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