Q1 2013 UK House Price Update...

Mixed results this quarter for house prices. In real terms, (non-seasonally adjusted) prices reported by Nationwide fell by £700 this quarter for the UK as a whole. For Halifax, the same figure is an increase of £800.

For Northern Ireland, the average of Nationwide and Halifax figures show an increase of £2600! One swallow does not a summer make, so I await to see if the trend remains for more than one quarter. You can see from the long-term graph that price changes tend to be slow and that trends can only be established over periods of years, not months.

I've updated the graph a little to show current house price "crash" vs. the previous one in the 90s. In both cases, "crash" is an exaggeration - it's really just a long-term correction and only visible if prices are viewed in real terms.

I'm still waiting to see what happens with the government's various house price supports ("Funding for Lending" and "Help to Buy"). Interest rates are also something of a wildcard - they can be kept artificially low by the bank, but lending rates are largely determined by the broader market, namely inter-bank lending and gilt yields. If banks get jittery again, the former will increase because banks will be wary of lending to one another and if the market becomes worried about the UK government's ability to pay its debts, the gilt yield will increase, raising mortgage rates.

Summary: UK House prices are back to their 2003 level. I continue to save a deposit in various assets (cash, gold, stocks, gilts).

More fun with demographics...

Just a quick graph of the number of people born in the UK (shifted 42 years - e.g. the value for 2013 is actually the number of people born in 1971) and house prices.

Presented without comment.

;-)

Q4 2012 UK House Price Update...

Halifax have just today released their Q4 update for UK house prices, so I can combine them with Nationwide's to formulate an average, real price for both the UK and Northern Ireland (where I currently live).

Remember my hypothesis is that house prices are primarily driven by demand, and that demand is primarily driven by the number of people able to buy (not wanting to buy, but able to buy). The grey line on the graph is the number of people in the segment of the population I consider most likely to be in this category and you can see how well past prices have correlated with this line.*

Remember also that this graph is real prices. When dealing with time frames any longer than about a year, the corrosive effects of inflation on the value of money must be taken into account. As I outlined previously, it's more honest to discuss inflation in terms of the falling value of a currency than the rising cost of goods and services.

Since the start of the downturn (Q1 2008), houses have lost an average of ~£770 per month. This has slowed a little in the past year to ~£400 per month.

Given this, I will continue to save a substantial (15% or more) deposit and bide my time until the value of houses in my price range is falling less than the rent I currently pay. I still estimate this to be between 2015 and 2018.


* (Disclaimer - I have deliberately chosen the age bracket that most closely matches the data, rather than a broader segment that shows less extreme swings. However, any segment in the ~30 - 50 year old range fits the curve reasonably well).

Quick, lazy tip for dieting in 2013

Super lazy post because I've been insanely busy since my last post!

I'm currently in a hotel in Belgium chowing down on some salad that I bought from a petrol station because it's part of my new "how to stay lean while travelling overseas for business" plan.

Here's a handy tip for you to manage dieting without needing to count every calorie:

Take a look at the food label - if it contains less then 100 calories per 100g, you can pretty much eat as much as you want. If it contains over that, proceed with caution.

The reason for this is caloric density, which I believe is the major cause of the Western world's obesity problem. Food these days is simply so readily available and filled with calories. The human body evolved on foods like vegetables, berries and meat (think fish, deer, bison, mammoth), hence why I'm also a big proponent of "paleo" style diets. All of these foods contain either a lot of water, fibre, vitamins or protein. They fill you up a lot and provide lots of nutrients relative to their calorie content.

Modern foods can be extremely sweet or greasy, neither of which we would have been able to find in the wild (the exception would be something like honey, but that would be a rare treat, not to mention potentially dangerous to harvest!).

Anyway, the "100cals/100g" rule is handy if you're out and about and need to grab something from a corner shop / roadside petrol station / supermarket.

On a related note, one sure-fire way of overdosing on calories is to get them from liquids - avoid fruit juice (eat the whole fruit instead) and any soft drinks containing sugar.

Oh, and here's a bonus video combining both economics and food:

 

Fewer, larger meals may be more satisfying and good for you too.

Today's post is about the benefits of eating less frequently (aka intermittent fasting), especially for smaller people such as myself.

As you might remember, I'm currently "cutting", or reducing my calorie intake to shed the last few pounds to get the abs showing through again. Given that I'm only 125 lb, my calorie intake when dieting is going to be roughly 10 - 12 times that figure, or 1250 - 1500 calories. In practice, I've found I need to go to the lower end of this even with a decent amount of exercise. At the moment, I'm losing about 1 lb per week at an average daily calorie intake of 1300. I do about four hours of exercise per week (two heavy weights sessions and two moderately strenuous yoga sessions). Remember also from previous posts that the absolute number of calories doesn't matter - it's more important to keep adjusting them depending on what the scales tell you on a weekly basis.

At such a low calorie intake, I'm finding it much easier in terms of hunger-management and actually getting satisfaction from meals to squeeze them into a smaller window of time. I had (years ago now) tried the "little and often" style of eating, but found it annoying to prepare small meals / grab snacks; was constantly hungry / never satisfied from a meal; frustrated by the micro-management and interruption of social events. Now that I'm only eating in the evening, between about 7pm and 11pm, I can get reasonably full from only 1300 calories and relax more about what I'm eating if I'm going out to the cinema / pub / restaurant with friends because I'd be getting all my calories in this window anyway.

It's also seriously helpful for my lifestyle (frequent overseas travel), meaning that I can be productive all day (drinking plenty of coffee and water) and then relax in the evening with a healthy meal from the hotel or restaurant. I don't need to worry about grabbing questionable food from the airport / train station / cafeteria and I can concentrate on what truly is important when it comes to diet / body recomposition - what you eat, not when or how often you eat.

So, if you're having trouble with hunger / not being satisfied from meals when you're losing weight, remember or try the following:

• Eat fewer, larger meals.
• Make sure the food is nutrient dense and low in calories - think fish and green vegetables and avoid simple carbohydrates like bread, pasta and especially sugar!
• Remember that the body is relatively slow to adapt - it can take weeks to adjust to a new way of eating or see a significant change in fat / muscle composition.
• Drink plenty of water and hot drinks when you're not eating. (Make sure the hot drinks don't have any calories in them - think black coffee and green tea with no milk or sugar!).

Quarterly UK House Price Update

Now that Halifax and Nationwide have both published their quarterly house price data, I can update my graph of house prices vs. demographics. Incidentally, as you may have read, the ONS updated their census data too, so that is also reflected here with the data for the population of 40-42 year olds.

I stand by my assertion that it's demographics and population that determine the fundamentals of the economy and, if things pan out as the model is indicating, house prices in real terms are going to keep drifting down until 2015 - 2018. It's important to remember that the prices reported in the press are always going to be nominal, so I expect reported prices to stay fairly constant. Many people will assume that house prices are stable, or possibly even rising slowly, but once converted to real prices, the slow drift downwards will become apparent.

It's also important to remember how slowly the cycle of house price highs and lows moves. From the graph of UK prices (blue line), the time between the last peak and trough (1989 - 1996) was 7 years. In comparison to the recent house price peak in 2007, that looks like a small correction, so I cannot see the bottom of the market being achieved before 2015.

Another take away point from the graph above is that house prices are now the same as they were in 2003!

Here's another interesting graph of UK demographics (again using updated data from the 2011 census):

The dark blue and purple lines are UK house prices from Nationwide and Halifax respectively. The pale blue line is NI house prices. The most interesting line is the grey one. This is the population of 65 - 84 year olds. It was fairly stable until 2007, but from then on it steadily increases. I do not see this being supportive of either UK house prices or the wider economy and there are many who see this as a fundamental shift in the developed world. For more on this, see books such as Gray Dawn: How the coming age wave will transform America. And the world by Peter G. Peterson.

My suggestion for potential first time buyers is to patiently wait for the housing market to settle, bearing in mind this could be a few years yet. Following the money rules from earlier posts, you should be spending no more than 25% of your take-home pay on rent (ideally less) and saving as much as you can (at least 10% of take-home, if not 25% if you can manage it). You really want to be able to build a 20% deposit to secure a reasonable rate on a mortgage, ideally 25%.

Good luck!

European Debt Crisis

Sorry, another fantastically lazy post from me (I've been busy with work and it's been interrupting my diet too!), but hopefully an entertaining one.

Nigel Farage is one of the few politicians to tell it how it is. Enjoy!