Friday, Apr 17, 2009
A Slow and Painful Decline
Home.co.uk: Market Prices Falling More Slowly
The UK housing market presents a mixed picture this month, consistent with sellers’
expectations of a spring bounce amidst desperate market conditions. Asking prices
have held firm in 4 of the 9 English regions and Scotland. Greater London and the
South East show small rises in asking prices for a second consecutive month.
However, price-cutting is still prevalent and Time-on-Market indicators are still rising
overall.
Posted by tinecu @ 10:34 AM (846 views) Add Comment
9 Comments
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1. yorkshireman said...
A market is not based on asking prices, but on the sale price, because that figure, agreed between seller and buyer, sets the price for the market. There is also a third party involved ; the lender and his prices (interest rates) will not be falling slowly. In fact, they will be going up. Draw your own conclusions.
2. paul said...
Bigger parachutes don't stop the descent.
3. Tinecu said...
Eh up yorkshireman. Its folly to think asking prices aren't important. They have to be sufficently reasonable so the buyer and seller can 'meet in the middle'.
Most people don't have the gumption to offer 70% or less of the asking price...so these prices will have to fall and fall before the market really starts moving again.
Paul...Agreed. These only one direction prices can go in the short term.
4. Watching With Amusement said...
This is all about asking prices? So what? As has been stated, the market is not based on asking prices.
5. 51ck-6-51x said...
yorkshireman -
I agree that the market price of an asset is not the bid or offer as you point out. The thing is when liquidity dries up because those holding the asset and those bidding for the asset do not find a matching price then one cannot give such a market price, in this scenario one only knows a spread for the asset (the best bid, and the best offer) and outstanding interest (size of the potential market at these levels, or at multiple levels stretching out from the best bid/offer)* hence all this news about asking prices and buyer interest.
Of course the other side needs reporting too:
There are large levels of unsold stock, less seems to be coming onto the market than was (still increasing though, just at a slower pace);
It would be nice to have data on rejected offers! The fact that asking prices are not shifting down is information though.
A further difficulty arises in analysing the housing market during illiquid periods since the assets making the market are inhomogeneous.
In my mind (and many others on the site, I believe) the breaking point will come when there are more forced sales rather than when people become desperate to buy houses, unless there is some government intervention which acts to put inflationary pressure on house prices, which would be very difficult for them at present.
I totally agree with your point about the influence of the mortgage market which one can see in the massive spread between the interbank rate and mortgage rates compared to the pre-pop-era.
* This is why banks & funds have been complaining about mark-to-market accounting in illiquid markets and the 'harm' it does to their perceived capital base.
6. happy mondays said...
@ Yorkshireman (interest rates) will not be falling slowly. In fact, they will be going up. Draw your own conclusions. Why ? I would like to think they would as my savings are not doing so well, and im sure the goverment would like to keep interest rates low as, to save to housing market?
7. mark wadsworth said...
@ Paul "Bigger parachutes don't stop the descent."
Damn! I wish I'd thought of saying that.
8. Happy Renting said...
Asking prices are firm. Sort of.
Great, we can ask our way out of a recession.
Dream on!
9. Dj2000 said...
Asking Prices Falling Slower
Instead of the negative view to house prices coming down why don't the media promote people to sell their houses and get out why they can........oh I forgot the media is invested in the housing market somewhere along the lines