Saturday, Jul 05, 2008
VIs waffle on
FT: Dwindling house stocks to lift prices
Some "experts" tell us there will be a floor to house prices. A pity their genius didn't tell them there was a ceiling too. A bit of light weekender reading from the FT, just in case you thought it was all serious stuff in that paper.
Posted by letthemfall @ 01:24 PM (704 views) Add Comment
10 Comments
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1. Beartil2010 said...
One can only assume that these VIs have no knowledge of how 'The Mortgage Market' gets its money. oh if only the mortgage market will recover, and we can borrow as much money as we like, then house prices will go up!
Sorry lads - the investment banks are still suffering badly, and inflation is now here and not going away. We're not going to see 125% loans and 2.5% base/ 4% mortgage interest rates for a long time.
2. Confused76 said...
Professor Nikel is quoted many times. He is he true Comical Ali
3. new user 2007 said...
"Shortages" caused the last bubble too. Funny how those shortages did not put a floor on prices that time....large swathes of the population must have died to suddenly get rid of the shortages that time (i.e. otherwise prices could not have fallen then either:)
4. housebear said...
"The losers, said the NHPAU, will be first-time buyers, who look set to remain priced out of the market for the foreseeable future."
For every % point downwards in prices, there will be a more first time buyers available "in mathematic principle" who are able to buy a house.
But most will not buy even if they CAN afford it.
The perception that it will be cheaper tomorrow is now in the public mind
Prices for some may only need to drop another 5% and hey presto, with their deposit all the sums add up, for some they might have to drop 40% before the sums add up, so to speak.
I could buy affordably today in the sense of an affordable monthly mortgage payment, due to saving a massive deposit, but I'm sure as hell NOT going to.
My point I guess is that the press having grudgingly conceded prices are going down, are now trying to rush through the business cycle.
I can remember adverts in the 90's from EA's when prices had only just started slide showing a couple with sad faces sometime in the future, saying to each other how they wished they had bought in 92. Looking at the graph on HPC we had another couple of years of price falls to go then.
I know there are a lot of posters on this site that know a lot more about economics than I do. Many have made predictions on how far prices will fall and presumably this is when they are going to buy their dream house.
For the many, myself included, I will look at the numbers, and then I will ask my self one question.
Does it FEEL like a good time to buy yes or no?
Somebody famous once said, "One instinctively knows when something is right"
Comments please?
.
5. growler said...
totally agree housebear.
I think the demand/supply discussion offered by largely unqualified agents who don't understand basic economic theory. The market price is the intersection of two curves/lines. The supply one is bottom left to top right on a graph and near vertical as houses are hard to build quickly and the demand top left to bottom right - and not so steep. Right now, the whole demand function has shifted away to the left as all individuals are less able to pay the price along the entire length of the curve. Thus - even if supply doesn't change (lets assume near nil housebuilding right now means this) then the price falls as it has been doing. If you entered a huge housebuild programm right now (moves supply curve right) - the price would crash still further due to mass oversupply (as it happening in some cities). IF IF IF demand and supply remain stable where they are, there will come a time when the price finally gets to it's bottom - the new intersection of the two curves. Trouble is.... if the credit crunch mutates into more problems - as I for one believe, that demand curve will move away to the left once again. That causes yet further downward price pressure REGARDLESS what happens to supply. If building companies go bust and people get foreclosed, the supply is increased again ----> more crash. So until things settle, they can only go one way: DOWN.
6. nooneo said...
"With buyer demand still strong, the reduction in the number of new homes being built is exacerbating the declining stock of empty property across the country, said Nicholas Leeming, director of propertyfinder.com. "
What absolute fiction - errrr. just a hunch but I think this chap may be a VI . With the number of agents closing every week it's hardly surprising that this guy can come out with this drivel - I think propertyfinder are another portal that must be seeing it's database of homes increase by the week and the number of agents (or agents offices - I think they charge by the branch) and therefore it's revenure], dwindling away!
I think he fails to notice the thousands and thousands of properties being added to the "for sale" section every month.
What do the say - Lies, damn lies and statistics, well I reckon that were are about to enter the world where pure fiction is portrayed as fact.
What do they also say, you can fool some of the people all of the time..... Well that might be long enough to become President of the USA but I for one ain't biting!
7. growler said...
I heard a great line on Radio 4 today. Vital statistics are like a bikini. What they reveal is exciting, what they don't is vital.
8. it_is_going_with_a_bang said...
more experts!
One of the main reasons people are not buying is because they quite simply cannot afford the prices at anywhere near where they are.
So all this b*llsh1t about prices will keep on rising is a load of cobblers.
If nobody has the money to but how on earth to prices go up.
Ah yes. The experts. Estate Agents. Just like yesterdays experts. Estate Agents. The people shutting down branches everywhere you look and going bust.
QUICK tell everyone prices will keep going up .... it's been working for YEARS now. Banks will lend in a month or two because ... the estate agents think so.
LOL
9. guiriduro said...
The market has slowed to a crawl precisely because the prices are too high. Supply has reduced (for the moment) because many people have taken their properties off the market as they don't like the prices being offered. But demand is arguably much more constrained as affordability plummets due to the double whammy of more expensive, less widely available mortgages and real increases in the cost of living (fuel, food etc.) which are further pressuring the amounts people are willing to set aside each month to pay for the more expensive mortgages. So its a waiting game on both sides, but my money is on supply giving up and dropping sooner than demand finding some incredible new source of capital to pay with.
So to examine the short to medium term pressures on trend, I would say that builders offloading stock, smart discounting early sellers (who are willing to take a smaller loss now), forced sellers and repossessions will drive an expansion of supply at lower prices. On the demand side, I cannot see any easing that will raise buyers ability or willingness to pay in the short term, and add to that they now have an expectation of lower prices, this isn't going to change, if anything as recession begins in earnest, demand will further dry up at anything above HPC rates. The present constriction in supply is due to the entrenched view that house prices only go up, and this view will diminish in time, just like house prices :) QED
10. Just Interested said...
there will always be a demand at the right price the thing is the right price is somewhat lower than todays market. I think banks have woken up, they no longer with to lend 125% of the value or 5-9x wages.