Posts tagged as real terms

05 Jun 2008

Updating real house prices

The Nationwide house price index through June shows a decline of about 7% from the peak last autumn. This is being reported as a significant correction but viewed from the perspective of the long history of house prices relative to general inflation, it is only another small step in the market’s four-year defiance of gravity since deflated house prices first peaked relative to their long term trend. Without the oxygen of credit, prices have held up remarkably well but market psychology has changed far more than prices yet indicate. The bear market is about to begin in earnest.

read more Insights by Stuart Fowler
14 Apr 2008

How US came to believe in the dangerous home financing myth

Published in FT, 14th April 2008 (Letter by Stuart Fowler)

read more News by Stuart Fowler
01 Apr 2008

The lessons of Japan and its lost decade April 2008

A popular theme today is that the scale of the credit crisis and its resistance to normal corrective mechanisms means we should dust off our history books and study the Depression economy of the 1930s.

read more Research by Stuart Fowler
30 Mar 2008

Japan’s ‘lost decade’: the new bogeyman for post credit-crisis stockmarkets

Japan’s ‘lost decade’ of the1990s is rapidly becoming the bogeyman of stories about the future for the world economy and stock markets in the wake of the credit crisis. The same fate supposedly awaits the US (and UK too) as payday for a decade of binge banking and mass delusion by bankers and their customers about house prices. In a new position paper, wealth manager No Monkey Business examines the relevance of Japan’s dire experience of the ’90s for other countries today.

read more Commentary by Stuart Fowler
12 Aug 2007

Update on the real house price cycle

We have updated the Nationwide house price index through June, expressed in terms of deviation from a sustainable long-term trend. Our way of measuring house prices focuses on house prices as a cycle in real terms, in common with our approach to other assets. The index from 1957 is deflated by general inflation and then a trend fitted (using a simple regression technique), firstly for the whole history up to the time of the observation (hindsight-free) and secondly for the whole period to date. The curent level relative to trend is expressed as a ratio, equivalent to overvalued, undervalued or normal. Both ratios show extreme overvaluation and have been rising rapidly for the past four quarters.

read more Commentary by Stuart Fowler
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