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Rinoa

Rising Unemployment = Falling House Prices...

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... has no basis in reality. Says Sunday Times

Another month, another rise in unemployment, with the claimant count up by 39,300 last month to 1.54m and the government’s preferred measure rising by 232,000 to 2.26m in the three months to April. What does this mean for the housing market?

The belief that property has to remain in the doldrums if unemployment is rising is stated so frequently, you might think it is fact. It is like the equally often stated view that the economy can never recover when the jobless total is rising. If the latter were true, economies would never recover. Unemployment is a lagging indicator; for it to turn down before the economy turns up would be the tail wagging the dog.

What about housing? Fear of unemployment, if sufficiently widespread, does make people hold back, even if the vast majority remain in work. But the most striking evidence that unemployment does not drive the housing market comes from the 1980s. In the 3½ years from January 1983, when the Halifax’s house-price index was launched, average prices rose by 36%, but unemployment jumped from 2.7m to 3.1m.

Yet another HPC myth bites the dust.

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HPC's very own schizophrenic is posting his drivvel again.

Possibly. But at least I can spell drivel. ;)

It's fascinating watching the bears squirm at the moment..... The last great hope for their crash has been rising unemployment and higher interest rates.

Thats the unemployment myth busted.

So now it's down to interest rates. Gee, I wonder if we can find a previous time of rising prices and rising interest rates, probably won't have to look back very far at all. :P

Edited by HAMISH_MCTAVISH

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Guest pioneer31
Ouch. Thats a lot of bears just got burned.

We should do a HPC mythbusting thread. Theres so many of them, it's ridiculous.

but grammar a weak point?

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I expect this to be a precursor of house price falls, not for house price falls to immediately mirror the volume of unemployed.

Surely it takes some time for increased unemployment to lead to mortgage defaults, which will take more time to lead to repossessions and these properties actually being sold. What do you think?

With there still being lots of news of work closures and general cutting back in the work force I expect this to start hitting repossessions towards winter time. I think we are in for another leg down in property prices within the next quarter as unemployment rises.

Another 15% of property over the next 9 months I reckon.

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Guest pioneer31
... has no basis in reality. Says Sunday Times

Yet another HPC myth bites the dust.

Why do you never quote the Sunday Times, when it's in 'doom and gloom' mode? <_<

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More UTTER ********.

unemployment-house-prices-1975-2008.png

Thanks, MOP. I thought the OP sounded pretty daft. Perhaps the bulls need to apply some common sense.

Besides, I am not convinced that house prices lead economic recovery either. Surely they are a symptom of either an increases in wages or a laxness in lending? How else would prices go up? As wages seem to be going down, with unemployment increasing, I see little upward pressure on house prices materialising.

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... has no basis in reality. Says Sunday Times

Yet another HPC myth bites the dust.

....yeah but ...."average prices rose by 36%".....in the three years prior to '83 inflation totalled 40% ....and rose a further 15% between '83 and '85....therefore real house prices actually fell..... <_<

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Ouch. Thats a lot of bears just got burned.

We should do a HPC mythbusting thread. Theres so many of them, it's ridiculous.

Dude, tell me about it; my mate got the sack last week but he says he'll be fine cos his house is worth loads...

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Ouch. Thats a lot of bears just got burned.

We should do a HPC mythbusting thread. Theres so many of them, it's ridiculous.

flogger.jpg

When Hamish isn't posting on HPC, his secondary hobby is obvious.... :P

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what utter ******ing shite. they'd be better off getting sibley to write for them.

Example 1 - "In the 3½ years from January 1983, when the Halifax’s house-price index was launched, average prices rose by 36%, but unemployment jumped from 2.7m to 3.1m"

er, real versus nominal? annual wage inflation was close to 10% over that period! InternationalRockSuperstar's chart illustrates the point by deflating house prices using a retail price index.

Example 2 - "...in a reversal of the 1980s, however, the jobless total fell from nearly 3m at the start of 1993 to less than 2.2m in the spring of 1996 without a recovery in house prices — which stagnated, only picking up later in 1996"

genius to use a period when unemployment was falling to illustrate the impact of rising unemployment on house prices.

Edited by the flying pig

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Guest pioneer31
Possibly. But at least I can spell drivel. ;)

It's fascinating watching the bears squirm at the moment..... The last great hope for their crash has been rising unemployment and higher interest rates.

Thats the unemployment myth busted.

So now it's down to interest rates. Gee, I wonder if we can find a previous time of rising prices and rising interest rates, probably won't have to look back very far at all. :P

Hey Scottie,

David Smith has an excellent record in predictions, hasn't he? :lol::lol:

Straw, clutching......

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