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Guest Steve Cook

Medium Term Predictions

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Guest Steve Cook

For what it's worth, my own feeling with the housing market at the moment is the following:

There is a very low transaction rate.

Within the narrow confines of the above, there are some signs of a slowdown or even slight up-tick in selling prices. This is presumably based on a a very few brave/foolhardy buyers

This will have the effect of encouraging those people who have been hanging on by their fingernails to jump ship and try to sell in what they perceive to be a stabilising market.

This will cause a sudden upturn in supply. However, for the majority of potential buyers out there, the fundamental reality has not changed. Prices are still too high, cheap credit is still not widely available and many people are at significant risk of losing their jobs. For all of these reasons, the sudden increase in supply will not be met by a commensurate demand.

This will cause a resumed downward pressure on prices such that, at best, the "recovery" in prices will stall.

My own view is that unemployment is going to continue to rise regardless of any other factors. It is very likely that lender's interest rates will start to rise irrespective of what the BoE does with base rates. On the basis of these two factors alone, the downwards pressure on prices will resume sometime later this year.

Anyway, that's my prediction. Time will tell.

Edited by Steve Cook

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