Note to self - don't post a new topic at 12:00am and then realize at 02:00 AM the graphs needed to be logarithmic

Well anyway, plan B time.

I have basically been thinking along the lines of a possible quick correction in NI for a while now (initial stages anyway) but I thought it best to look a lot closer at previous historical data first before making any more assertions to that effect. Whilst I had been referring to the overall 'lethargic' style of the 90s S. E. England correction, the data for Greater London shows relatively quick falls from the peak in it's initial stages:

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OUTER MET
Q1 1988 81767
Q2 1988 86556
Q3 1988 94013
Q4 1988 96121
Q1 1989 98425
Q2 1989 99979
Q3 1989 97295
Q4 1989 92333
Q1 1990 86572
Q2 1990 84392
Q3 1990 82089
Q4 1990 77613
Q1 1991 77775
Q2 1991 79811
Q3 1991 79286
Q4 1991 76604
Q1 1992 74023
Q2 1992 74436
Q3 1992 72286
Q4 1992 69042


In the period between Q2 1989 and Q4 1990 (21months), the average nominal HPs decreased approx 22%

Basically, I will post some graphs up here (in the next few days) comparing the build up to the NI HP peak against the peak and subsequent correction pattern displayed in Greater London during the late 80s / early 90s (hence the logarithmic graphs or whatever graphs I am finally happy with!)

Data used = Nationwide nominal quarterly averaged

I gave up on the logarithmic graphs - the graphical representation was too skewed. Therefore, I reverted back to the originals and removed the 'constant' I had added to the London / G. London data to keep it in the same range as NI.

I will get some caveats out of the way now before I go on:

- the data I am using is Nationwides Quarterly AVERAGE transaction data (nominal - not adjusted for inflation)
- I will be keeping inflation out of the equation for the moment to keep things simpler
- the peak has occurred using this data; it is of course possible that a further 'peak' may occur in the next few years but highly improbable
- All analysis done using this data does not distinguish between house type or location

Lately, anecdotal evidence and different Reports (RICS etc.) combined with my own thoughts regarding the shape of the NI incline have cemented my view that a Quickish Correction is the most likely scenario as a pre-cursor to a longer period of HP stabilisation. With this in mind I thought it would be interesting to compare the shape of the London / Greater London 1990s 'correction' peaks with the incline of the NI peak thus far. To do this I took the L/GL Nationwide nominal data from 1985-95 and set this against the 2003-2007 data for NI so far. The peaks were matched (Q2 1989 / Q3 2007).

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The patterns of the inclines follow a similar pattern until early 2005 when the NI incline gets steeper. Therefore, I projected the same pattern of peak onto the NI incline and tracked the same decline thereafter.

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Looking at the projection down, you can see an approximate 40% drop in the initital stages (2.5 years from peak).

I think any such a sharp decine is unlikely* because these projections are pure fiction and are only an experimental excercise in viewing HP movements between two different eras. Also bear in mind:

- different economic climates existed, especially with regard to IRs and many other factors were different (socio - political etc).

However, the bottom line for me is that the final stage of the incline was far too steep to ever be sustainable and hence some quick initial stage of correction will be experienced.

*Therefore, I think it is realistic that we will experience (25% +/- 5%) within 18 months of the Q3 peak. Thereafter, I do think buyers will start to re-enter the market following any such drops - but more of that later.

all IMHO of course and I fully acknowledge that no-one knows what will happen

edit - ignore the '+120K' tags on the G.L. / London graph legends

LATE ADDENDUM 17/02/08 am : I am just adding the first graph again but with the addition of 'all UK'

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Interesting graphs PP and it will be interesting to see if it pans out according to your graph. Judging by the number of decreases on TDGTTS over the last few weeks I think we may see a quick sharp shock then a stalemate for a while.

However I think that the BTL brigade may be a different influence this time and could bring certain houses/flats down quicker while detached could still hold their value for a while.

Agree Doccyboy

As can be seen in Manchester, Nottingham and Leeds at the moment, the price of flats has been very volatile, with many being sold at auction for far less then they were bought 1-2 years ago*. However, I have no idea regarding the number of new build flats in Belfast, so don't know how useful any comparison with the above mentioned cities would be.

Reading the Guardian article today (and having watched some progs), Manchester does seem to have a ridiculous abundance of new-build flats.

*edit - and of course a lot of these falls were down to miss-selling as alledged in the Panorama program

2nd edit - the problem with average data is that there is no distinction between areas and property type