Saturday, Sep 18, 2010
The media spins back
Aboutproperty.co.uk: Rics: House Sales will Improve
Well I've never posted before so please go easy on me. But on my Google alerts this morning the tone of the articles were a lot more bullish than usual. So I thought that I would start with this one. I guess this is a good example of positive spin on bad news?
Posted by mystie010 @ 09:18 AM (1753 views) Add Comment
30 Comments
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1. righttoleech said...
You must learn to read between the lines.........The headline......'House Sales Will Improve', is based on the fact that 18% of the surveyors thought that sales will improve. So the other 82% think sales will stay the same OR GET WORSE. An honest headline would be 'House Sales Will Fall........or rather....are expected to fall according to SO CALLED EXPERTS. Welcome to the lying cheating world of VI spin.
2. estrader said...
Don't get House 'SALES' confused with house 'PRICES'. In *any* asset class, activity will increase on the way up *and* on the way down. It is good news that "Sales prospects for houses in the UK are expected to improve, despite falling house prices".
3. mystie010 said...
I was quite astonished by this headline because here in South Devon prices are dropping by £5k - £10K all over our locality and still not selling. I guess this headline is just another example of how these VI guys are determined to squeeze every last drop out of this market.
4. wdbeast said...
Rics spokesperson Jeremy Leaf explained:
"There can be little doubt that the restrictive attitude to the provision of mortgage finance will continue to limit transaction activity in the market.
Wow, what a lot of big words, obviously an English scholar, not an economist!
5. righttoleech said...
Point taken estrader......a bit of paranoia on my part. Sales are of course good for surveyors, so whether aspirants are piling in under false hopes or failures bailing out on the road to bankruptcy, they get their couple of hundred quid for the 2 minute inspection.
6. mark wadsworth said...
What estrader says (hopefully). That article appears to be more or less completely fact free, and nothing to get excited about.
7. mystie010 said...
Sorry guys it was my first ever post.
8. Arthur Kinnell said...
So, it's a "restrictive attitude" now, is it? Could be a handy excuse for lots of things - sorry, you can't have a pay rise, I'm suffering from restrictive attitude syndrome.
9. will said...
Jeremy Leaf forgot to mention this October's change in the FSA's lending/borrowing rules - no interest only, larger deposits etc.
10. str 2007 said...
Estrader
Most asset classes don'thave the supply restrictionof the housing market. Taken on a small scale, if a house sells in say 4 weeks in a particular street for say £300k the in libation for the next person selling the same spec house in that road is to try for another 5-10k.
I guess if overall say flats dropped in value due to btl pulling out you would see anincrease in sales volume in that particular sector.
But for the reason I state above I would expect a pretty subdued Market if prices are to continue falling.
Just go back to jan'09, volume started to increase month on month and sure enough by march '09 prices had bottomed and started to increase.
IMO 2-3 months of increasing volume will see prices increase
11. str 2007 said...
Sorry about spelling etc posting from I phone, so it's worse than usual.
12. wdbeast said...
My read on the current market is that;
Volume sales will not increase until prices drop.
Prices will not drop until there are a high number of forced sellers.
Forced sellers will come to the market once interest rates increase.
So ironically what eastate agents really need is an increase in interest rates to get the market moving again.
13. techieman said...
"Sorry guys it was my first ever post." no need to apologise at all, in fact bullish or bearish articles are all good!
wdbeast - IMO we dont need a high number of forced sellers, however you are right we do need some. If there is a small number of forced sellers (and it can be because of circumstances like divorce or job relocation or inheritance etc.) then those prices set the tone for the localised market. Yes the more forced sellers the more likely the prices come down quicker but we dont need massive forced sellers and massive repos.
Having said we dont need them, i think its likely that whatever happens to base, the SVRs will creep up.
14. techieman said...
... sorry.... i didnt finish:
"Having said we dont need them, i think its likely that whatever happens to base, the SVRs will creep up", so we are LIKELY to get them
15. str 2007 said...
Morning techieman
Do you see the stock markets having much of an influence on house prices this autumn/winter & do you think yesterday was THE tipping point, if there is still to be one, or another leg up yet?
16. estrader said...
str2007,
I wasn't making a prediction, I was stating a fact. There are many assets classes that are limited. Company stocks are a very good example. Besides, demand is limited by affordability and also by 'enthusiasm'. If people simply refuse to pay current prices then no matter how restricted supply is or how available credit is, prices will not rise. If you think house prices will just keep rising then buy a house now, you can't lose. If you are not buying a house, then why aren't you?
17. str 2007 said...
Estrader
But you don't go to buy some vodafone shares and find there aren't any, you simply get quoted a price (you'd assume based on current volume requirement, but I agree in the case of shares prices can rise on lower volume nut not always sustainably.
With regard to house prices, if people refuse to buy, then surely you'd have a fall in volume.
I'm not being bullish, just questioning significant and sustained house price falls against a background of sustained increasing volume.
18. str 2007 said...
With regard to current volume we're at just under half of peak levels when self cert made up 1/2 of mortgages apparently.
So I guess we're now only seeing sales going through to people who CAN borrow, less a few who's circumstances have changed and a few bears like us sitting off.
If the banks further ristrict lending then obviously prices will fall and also maybe volume as the amount of people who qualify for a loan reduces
19. mark wadsworth said...
Re Techie's comment at 12 re 'forced' sellers, I like to refer to these 'forces' as "the D's"
Death, debt, drink, divorce, dole, drugs, disability, disenchantment, doing a runner.
20. str 2007 said...
Mw
Have you got a 'D' to cover relocation due to new job, as this is probably the most likely 'semi' forced sale we're likely to come across.
I've noticed a few sales near me and suspect it's something to do with the company that does the line refereeing software for tennis and rugby hoping to get the contract for football.
21. mark wadsworth said...
A 'D' for changing jobs? Good one. How about... "developing your career"?
22. techieman said...
Hi str2007
"Do you see the stock markets having much of an influence on house prices this autumn/winter & do you think yesterday was THE tipping point, if there is still to be one, or another leg up yet?"
well if the market doesnt run out of steam to the upside soon then thats supportive of HPs because i do believe in a correlation. For that reason alone i cant see it. As for THE tipping point - i dealt with that before. calling the high of any trend on any time scale is difficult. i will post what i posted on another site as my answer - by the way i posted this on friday at 8:30am ours [ i say this because by the time NY opened the 1137 level was quite a bit lower]:
"once we get past the 78% retracement and then the 89% and based on there being quite a few bears out there hoping and praying that 1129.90 holds, its unsurprising that the market makers run the stops and a blip to where we are now as i write happens – i.e. 1137 – 38 basis cash.
So now any further? Well this looks like an ending move, it has already done what it needs to to make the bears look dumb, the sentiment surveys are now skewed to the bull side and all the indicators stochs / rsi etc are [extremely?] overbought.
of course we have opex today too, although last month that was a bit of a damp squib today could be a different story.
Of course if you have no position now is a good place to short with a plan to short more agressively should it go higher. However most people will already be short, suffering pain and unlikely to add more – infact much more likely to want out, which is of course what happens when stops are run.
to summarise it looks to me that todays move might very well be a classic suck in / bear squeeze. 1127 then needs to hold for the bulls to remain in charge."
so IF we get some downside follow through next week then yes i favour that being the top of the retracement. The probabilities favour that the 1137 will hold - and we will at least go back to around 1100. After that we will just have to wait and see! If we do break 1137 to the upside then i will stand aside and see how much farther that goes. Most people are predicting "one more high" of this move. however i think the FTSE top is in now, and perhaps the S&Ps make a new high but that diverges with FTSE.
As i have said this is just my view. see http://www.housepricecrash.co.uk/newsblog/2010/09/blog-comments-30218.php number 10.
23. techieman said...
Yes mark w, i remember D reasons for D potential falls :)
i was just trying to say that these reasons can result in forced sellers and in price levels at the margins falling ( so we dont actually need increases in IRs.... although of course that would increase momentum to the downside).
24. str 2007 said...
Thanks for that techieman, yes I did put a small short in at 1130 and ok at the moment on that.
I guess we'll see what next week brings.
Obviously would be nice to add to this if the opportunity arises.
25. str 2007 said...
Btw was that 1137 level based on a previous support / resistance level or did you have some other way of predicting that ?
26. techieman said...
aha - a trade secret ;). [in other words a bit of a guess! ].
No there was a reason for it, it was basically that i thought the FTSE should go to around 5610 and that was consistent with the S&P at 1137. Add to that the FTSE opened with a big up gap, which looked like it could hav epressure to fill the gap.
As i said it never appeared as that High on the S&Ps on their trading day charts.
27. estrader said...
str 2007 ,
Be careful because there is an FOMC meeting early this coming week and the market can be extremely volatile around the announcement (around 19:15 UK) it wouldn’t surprise me if the market spikes up and takes out Friday’s highs. Other than that, I also see signs of exhaustion and an imminent reversal.
28. str 2007 said...
Thanks estrader I'll watch out for that.
Do you guys just close you're positions around news release times ? I'm not sure how to deal with irrational spikes and volatility other than close positions before hand.
Techieman
Do you have a specific calculation to correlate the ftse & s&p ?
You mention 5610 equalling 1137 but above also talk of them diverging as the ftse is now done ?
29. techieman said...
late night str 2007.
Do you have a specific calculation to correlate the ftse & s&p ?
No - there is a strong correlation between the two, which is of course why when i saw a target on the FTSE, i looked at the S&P and saw the 1137. As i said i sold the FTSE there. The S&Ps are less sensitive - in as much as a 1 point move in the ftse of course doesnt equal a one point move in the S&P, but the forms are similar. You can see this yourself if you look at Christian's site - they show the charts there.
"You mention 5610 equalling 1137 but above also talk of them diverging as the ftse is now done ? "
Well i meant 5610 equalled 1137 at the time, and that 5610 was a good place imo at that time to short. As i said that 1137 would have also trapped some bears - well alot of bears, and it was likely that to add to these woes for the bears they would open the market above the 1129.9 level - which they did and which turned out to be the high of the day (which makes me assume that most of the bears had been taken out overnight).
On the Dallies for the S&P this was not a key reversal bar, so its premature to declare this upmove as finished - which is why there are many people saying "just one more high" [is that a George Michael song?] Personally, again, i do think its likely the top is in, but it needs a pullback and a failure to breach the high before you could be more confident.
The FTSE however does have a key reversal - resistance now at 5550 - 75 and short term support at 5500. i think it breaks the support, and would look for 5460 - 70 before a pullback [by the way its indicating 5518 after hours]. its the strength of that pullback thats the key since we still are in an uptrend. Its more likely IMO that this wont breach the 5620 level - even if the S&Ps break 1137, before a more major downmove... but thats just my view, i will be looking to see what happens in the pullback as i said. Of course looking for an end of a move and taking a counter position is the most difficult, often frustrating but sometimes very very rewarding (in terms of money and some would argue ego) thing to do... which is why I try to do it!
"Do you guys just close you're positions around news release times ? I'm not sure how to deal with irrational spikes and volatility other than close positions before hand." - no never have done myself, unless there was a technically valid reason to do so. when i was trading short sterling when the IRs were moving all over the place, it was quite common for you to be making money before the release of the IR decision, and then for it to come back to your entry price as volume dropped and spreads got wider. Then the decision was announced and the market generally went the way it was going previously, oomph 100 ticks down as rates were raised 1%.
The volatility allows the stops on either side to be run. Sometimes it will be an excuse to take out the long and the shorts. After that its difficult to get back in emotionally and mentally. There is no real answer as sometimes it will spike, come back and then fall and other times it will spike and then keep going. More often then not though the spike will be eroded before the real move comes in. So the trick normally is to not get stopped on the inital move, but probably if it then reverses to set stops at the low/high of that spike. I have quite big stops that will need to go through a ton of resistance / support to get me out. i then see what happens.
If i was scalping - which is what EST does , then no i probably wouldnt run things over a figure. But imo scalping is very very difficult unless you can see the paper, which is of course what happened while you were on the floor, and which is why most floor traders had to give up once the open outcry markets closed, or go somewhere where the floor still operated.
30. str 2007 said...
Good to see your typing fingers are working again, thanks for all that.