I'll get to house prices in a while 
There's a couple of well known stories on the nature of a geometric series.
The first is the lilly pad riddle which is "If the number of lilly pads doubles every day in a pond, and it took 30 days to completely cover the pond, how much of the pond was covered on day 29? Answer: only 50%".
The important bit to understand is that it took a full 29 days to cover half the pond, and then just one day for the remaining half to be covered. Does that mean the rate of growth "boomed" in the final day? No it didn't, the growth rate was the exactly the same on day 30 as it was on day 1; ie, 100% growth.
The other is the fable about the peasent, the chess board & grain of rice. Same idea. Google it if you're interested.
House prices are a geometric series, not a linear one. This means if we want to visualise whether the rate of growth is the same/less/more that it has historically grown at, then the way to do it is on a graph with a logarithmic scale and not the normal linear scale.
I'll stop waffling now and let the graphs do the talking. Obviously the graphs are not predictive, I'm not saying they guarantee what drove the growth in the past must necessarily continue in the future, but the log scale graphs do answer that specific single question on the trend of the growth rate.
Acknowledgement: all house price data comes from Residex.
cheers,
twitch
There's a couple of well known stories on the nature of a geometric series.
The first is the lilly pad riddle which is "If the number of lilly pads doubles every day in a pond, and it took 30 days to completely cover the pond, how much of the pond was covered on day 29? Answer: only 50%".
The important bit to understand is that it took a full 29 days to cover half the pond, and then just one day for the remaining half to be covered. Does that mean the rate of growth "boomed" in the final day? No it didn't, the growth rate was the exactly the same on day 30 as it was on day 1; ie, 100% growth.
The other is the fable about the peasent, the chess board & grain of rice. Same idea. Google it if you're interested.
House prices are a geometric series, not a linear one. This means if we want to visualise whether the rate of growth is the same/less/more that it has historically grown at, then the way to do it is on a graph with a logarithmic scale and not the normal linear scale.
I'll stop waffling now and let the graphs do the talking. Obviously the graphs are not predictive, I'm not saying they guarantee what drove the growth in the past must necessarily continue in the future, but the log scale graphs do answer that specific single question on the trend of the growth rate.
Acknowledgement: all house price data comes from Residex.
cheers,
twitch
