use T.A to determine when you should buy and sell property?

[new_trader]

John Murphy, author of the book that many regard as the bible on TA, Technical Analysis of the Financial Markets defines it as:

“The study of market action, primarily through the use of charts, for the purpose of forecasting future price trends”.

Using the above definition: Would you/Do you use T.A to determine when you should buy and sell property? I am referring to buying/selling a physical investment in property or a home you plan to occupy, but does not include property financial instruments like shares.

 

[malaguti]

John Murphy, author of the book that many regard as the bible on TA, Technical Analysis of the Financial Markets defines it as:

“The study of market action, primarily through the use of charts, for the purpose of forecasting future price trends”.

Using the above definition: Would you/Do you use T.A to determine when you should buy and sell property? I am referring to buying/selling a physical investment in property or a home you plan to occupy, but does not include property financial instruments like shares.

I've often thought of it..download Nationwides last 10 years quarterly average value and plot that. Only thats precisely the problem, getting years and years worth of history. But yes, I would for certain.

 

[BeginnerJoe]

Unless you are a property trader, it would be a bit silly to use TA. Oh, let's wait 20 years for an up trend before buying. By then you could be dead from old age. Just buy it and live it and forget the rest. A property has use value. The earlier you buy the more value you get to use.

 

[new_trader]

Unless you are a property trader, it would be a bit silly to use TA. Oh, let's wait 20 years for an up trend before buying. By then you could be dead from old age. Just buy it and live it and forget the rest. A property has use value. The earlier you buy the more value you get to use.

So what is your response to people who say that a house is both home and an investment? Do you ask if they determined that through T.A?

Also, would you use T.A to determine how to invest £200,000?

ie/

a) Buy a house and get out of renting.
b) Invest in other assets and use the income to pay your rent.

I am not seeking advice, I am just curious as to what other traders/investors think, specifically those who believe wholeheartedly in T.A.

 

[isatrader]

As it's a discussion about TA I thought it would be useful to post a chart. Here's the Composite-10 (CSXR) of the S&P/Case-Shiller Home Price Indices and the Halifax House Price Index - All Houses (All Buyers), Non Seasonally Adjusted - Monthly Data.

The UK data looks weaker than the US as it's below it's 30 month MA still, unlike the US house prices which have pulled above the MA and the 30 month MA has also turned slightly positive. So from the UK chart I'd suggest that the UK average house price needs to get back above the £170k level to become more positive and potentially begin a new advancing stage. Whereas the US needs to move above 163 index level.

And to answer your question, I am already am using TA, as I believe the housing market is in the basing phase which with the method I use, is a good time to start accumulating for long term investments. And so I'm investing in multiple property developments through thehousecrowd, which is a new method of crowdfunding property developments. Which gives me a way to diversify across a large range of properties. This is a very long term investment for me (pension type) and the company doing it aims to pay a rental yield of 6% a year. My strategy is to average in over many years and so I aim to buy a share in a property every two to three months and reinvest the annual dividends into more properties to compound. I've currently invested in four so far since last September.

 

[malaguti]

As it's a discussion about TA I thought it would be useful to post a chart. Here's the Composite-10 (CSXR) of the S&P/Case-Shiller Home Price Indices and the Halifax House Price Index - All Houses (All Buyers), Non Seasonally Adjusted - Monthly Data.

The UK data looks weaker than the US as it's below it's 30 month MA still, unlike the US house prices which have pulled above the MA and the 30 month MA has also turned slightly positive. So from the UK chart I'd suggest that the UK average house price needs to get back above the £170k level to become more positive and potentially begin a new advancing stage. Whereas the US needs to move above 163 index level.

And to answer your question, I am already am using TA, as I believe the housing market in the basing phase which with the method I use, is a good time to start accumulating for long term investments. And so I'm investing in multiple property developments through thehousecrowd, which is a new method of crowdfunding property developments. Which gives me a way to diversify across a large range of properties. This is a very long term term investment for me (pension type) and the company doing it aims to pay a rental yield of 6% a year.

ISA that is amazing thank you so much..the data as thats what I was lacking. Clearly I didnt spend long enough looking. Definately TA is the way to go.

 

[isatrader]

ISA that is amazing thank you so much..the data as thats what I was lacking. Clearly I didnt spend long enough looking. Definately TA is the way to go.

thanks. I got the UK data from here: Lloyds Banking Group plc - Halifax House Price Index

 

[Liquid validity]

OK, my take.

I would monitor First time buyer levels, loan to income ratios and typical deposit.
Until all of the above improve, or the govt. capitalise on relaxed planning,
replacing the social housing model with shared ownership (govt or housing assoc.), then quite frankly,
its down or stagnant until average income catches up to average house price.

That should be a fun wait depending on whether you have an inflationist or
deflationist view regarding income levels...

So in that sense, obviously I would monitor average price levels.
No way in hell, I would base a decision solely on that though.
Real estate is a long term trade, buy to let, developer, whatever.
Price alone maybe OK for short term trades.
Long term trades do need an eye on fundamentals as well.
Just my view thats all, not everyone will agree.

 

[malaguti]

OK, my take.

I would monitor First time buyer levels, loan to income ratios and typical deposit.
Until all of the above improve, or the govt. capitalise on relaxed planning,
replacing the social housing model with shared ownership, then quite frankly,
its down or stagnant until average income catches up to average house price.

That should be a fun wait depending on whether you have an inflationist or
deflationist view regarding income levels...

where's the chart for that then :cheesy:

 

[BeginnerJoe]

Also, would you use T.A to determine how to invest £200,000?

I think it's too late to get anything good in London for that kind of money. If you had plunged in regardless of the charts 10 years ago, you could have gotten something bordering reasonable.

 

[new_trader]

I think it's too late to get anything good in London for that kind of money. If you had plunged in regardless of the charts 10 years ago, you could have gotten something bordering reasonable.

I used the figure £200,000 because it is approx the current average price of a house in the U.K. I get the impression that you wouldn’t consider other asset classes because you seem to consider owning a house as being a necessity irrespective of the long term outlook for prices. In other words, if can afford it, buy it. Am I right? If not, do you base your opinion on house price value using T.A? (I am assuming you use T.A with stock market investments/trades)

 

[new_trader]

OK, my take.

I would monitor First time buyer levels, loan to income ratios and typical deposit.
Until all of the above improve, or the govt. capitalise on relaxed planning,
replacing the social housing model with shared ownership (govt or housing assoc.), then quite frankly,
its down or stagnant until average income catches up to average house price.

That should be a fun wait depending on whether you have an inflationist or
deflationist view regarding income levels...

So in that sense, obviously I would monitor average price levels.
No way in hell, I would base a decision solely on that though.
Real estate is a long term trade, buy to let, developer, whatever.
Price alone maybe OK for short term trades.
Long term trades do need an eye on fundamentals as well.
Just my view thats all, not everyone will agree.

There are T.A's who say that everything you need to know is in the charts. Does this apply to house values as well? Obviously the charts aren't going to tell you about a neighbour from hell

 

[BeginnerJoe]

I used the figure £200,000 because it is approx the current average price of a house in the U.K. I get the impression that you wouldn’t consider other asset classes because you seem to consider owning a house as being a necessity irrespective of the long term outlook for prices. In other words, if can afford it, buy it. Am I right? If not, do you base your opinion on house price value using T.A? (I am assuming you use T.A with stock market investments/trades)

Well, even warren buffet said buy a damn house - I paraphrase. I believe every man needs a stable base to operate from. If it's your second house/home then by all means go look at the charts and cherry pick the moment. But if it's that easy, everyone would be doing it already.

For stocks, I go fundamental + technical. For forex and any other day trading stuff, it will be pure technical.

 

[Liquid validity]

There are T.A's who say that everything you need to know is in the charts. Does this apply to house values as well? Obviously the charts aren't going to tell you about a neighbour from hell

Exactly, I agree.

 

[new_trader]

Well, even warren buffet said buy a damn house - I paraphrase. I believe every man needs a stable base to operate from. If it's your second house/home then by all means go look at the charts and cherry pick the moment. But if it's that easy, everyone would be doing it already.

For stocks, I go fundamental + technical. For forex and any other day trading stuff, it will be pure technical.

It is interesting you mention Warren Buffett. I think he is a political shill, but occasionally he lets the truth slip out. In one interview he recommended that people buy a house because he said it was the best way for the average person to short the $US dollar. This exposed his view on the current US Monetary policy rather than his belief in owning property.

As far as I know, he still only owns one house which is the first one he bought in the 1950’s.

 

[BeginnerJoe]

It is interesting you mention Warren Buffett. I think he is a political shill, but occasionally he lets the truth slip out. In one interview he recommended that people buy a house because he said it was the best way for the average person to short the $US dollar. This exposed his view on the current US Monetary policy rather than his belief in owning property.

Warren Buffett Would Invest In US Property - US REAL ESTATE TV - YouTube

As far as I know, he still only owns one house which is the first one he bought in the 1950’s.

You are really seeing too much into something that's not really there. I doubt he cared about politics or knew how macro economics worked in his younger days in 1950's when he was just a regular joe, though somewhat exceptional kind of regular joe.

But look at what the house did for the man ? The house allowed him a base to build his billions. In the mean time, you are probably wasting your life going from rental to rental hoping to find the right kind of neighbours. The simple fact is in rentals, you will always get a bunch of monkeys.

 

[new_trader]

You are really seeing too much into something that's not really there. I doubt he cared about politics or knew how macro economics worked in his younger days in 1950's when he was just a regular joe, though somewhat exceptional kind of regular joe.

But look at what the house did for the man ? The house allowed him a base to build his billions. In the mean time, you are probably wasting your life going from rental to rental hoping to find the right kind of neighbours. The simple fact is in rentals, you will always get a bunch of monkeys.

This isn't about me Joe I am a happy renter and investor, I sold my property and haven't looked back. The original question was quite simple and you've answered it now. Buy a house whatever the price.

 

[BeginnerJoe]

Buy a house whatever the price.

Alternative perspective would be to get away from the monkeys at whatever the price. Then you can concentrate on what you really, really want to do.

 

[Shakone]

There are T.A's who say that everything you need to know is in the charts. Does this apply to house values as well? Obviously the charts aren't going to tell you about a neighbour from hell

I don't think there's anything that tells you everything. Also I don't think many TA people would consider it wise to trade an instrument based solely on an average of instruments, unless it's the average you're trading. Sure if you are trading a stock you might look at the Dow for some overall trend, but you're going to need to look at the stock itself. And that's just when there are 30 components in the average. How many components are there in the housing average? Think it would be nuts to make a judgement on one individual house from just that.

And then there are other issues such as liquidity, transaction costs etc, and the fact that not everything about a house is contained in its value or even its relative value to other houses, i.e. your personal utility.

 

[Liquid validity]

Sure if you are trading a stock you might look at the Dow for some overall trend, but you're going to need to look at the stock itself. And that's just when there are 30 components in the average. How many components are there in the housing average? Think it would be nuts to make a judgement on one individual house from just that.

Agree based on a specific property.
In that instance primary factors are location, amenities, search and survey etc.

The state of the overall market is more use in deciding to enter or exit the market
at a specific point in time.
For an individual property, its largely useless, except as a negotiating tool maybe.
Same regarding valuation - valuation report, land registry and local zoopla sold prices are worth more.