Originally posted by susiecam: Slight shot in the old foot really AB as the author clearly subscribes to the general view - no major earthquake, merely a very reasonable and probably overdue period of retrenchment, pretty much like 99.9% of us here have been saying. No crash, but possibly a slightly bumpier than ultra softy, cushiony, hardly felt it at all-y landing but, as we have been saying probably no pressing reason to go out there building a lead bunker in your garden and selling your grandmother. Now as with all such views it could be right and it could be wrong. Where we on this forum differ from other forums is that generally we acknowledge that no one actually knows, at this stage, whose version of events is the 'nah nah nah nah nah, I was right and you were wrong' version (well hey, that's how childish it's getting round here!) So in the absence of proof, and the presence of conjecture, can't we please stop this nonsense and just get on with the day to day which, for most of us, is challenging enough.
Err what on earth are you on about? The original poster asked about events in the 70's and I did a quick google and gave a reply. I find your comment regarding shooting myself in the foot offensive. You then start off about soft landings, nuclear bunkers and childishness.
Yes I'm new to this forum and I can see you've been arguing with others about some of their views. But where on earth did I even mention the current market in this thread? On other posts I've even been helping others with how to approach property development.
Don't get paranoid and jump down EVERY new joiners throat just because you're having some kind of fight with others.
Thanks for all the replies. Quick summary as there are a few tangents going on in the thread:
Adrian's graph shows 1974 house prices in relation to disposable income were just past a fairly large peak which peaked at 1973 1/2. Given RPI was quite volatile and was around 15% in 74-76 this matches Melboy's experience of large house price increases up to 73 followed by stagnation though the late 70s.
And the reason for asking, in the press release for May rightmove say they expect less transactions this year than in 1995 and possibly even less than in 1974.
(The press releases are under press page from rightmove's home page and then under "View recent and archived House Price Index reports").
Yes, the peaks in Andrew’s graph are essentially the peaks in the p/e ratio, so we have the top of the cycle in 1973, 1989, and 2004, plus a mini-peak in 1980. The Nationwide price index shows a short period (1-2 year) of flat prices after 1974, and again (2 years) after 1980, but significant falls after 1989.
The corresponding IR graphs shows large hikes that broadly match these peaks: 5%/1972 ->13%1974 and 6%/1978 ->17%/1980 both with stagnation, and 7%/1988 ->15%/1990 with falls.
Presumably the p/dpi (and p/e?) was unwound quickly after 1974 by high wage inflation rather than price falls, and the 1980 peak was small and killed off very early by the huge IR hike ending at 17%. The growth in prices restarted in 1983 when IRs dropped back to around 10% and continued on to a full blown p/e peak in 1989 terminated by the IR hike in 1988-90. In the absence of highly volatile IRs, the current boom seems to have been terminated by running up against the usual affordability constrains but this time with a smaller IR hike 3.5%/2004 -> 4.75%/2005.
In 1974 onwards wage inflation was high enough to unwind the p/e in 5 years *without* requiring price falls - about 10% is sufficient.
