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Why The Housing Market Has Picked Up Again


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Alright you have convinced me. When unemployment reaches 10 million you can be assured that house prices will also have gone up and likewise when unemployment reaches 25 million they will have increased even further. It all makes sense now.

Yes, unless you think there could be a collapse in the banking system, with no hyperinflation; in that situation sell your house and put it under your mattress.

Is inflation a sign of a healthy economy?

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It is also worth considering to what extent the property market has really picked up over the last few months.

Someone suggested in a thread (can't remember which one) that the Nationwide Index has been severely skewed by the Nationwides tightening of credit (access to mortgages) criteria - meaning that their house price index now reflects property buyers with large deposits and can access the available mortgage products whilst other people can't.

Also, in terms of the property market picking up - yes, house price indexes showing some level of rise - but what about the level of transactions? Here in the west Mids, using PropertyBee to track parts of B'ham, Bromsgrove, Droitwich, Worcester, etc. I certainly saw a pick up of activity between Feb and May, but since May activity has dropped right back - certainly in terms of the numbers of properties going SSTC. For example, those of you with PropertyBee can look at Worcester - WR4 postcode and look at the number of properties going SSTC for example for Connels and Michael Tuck during August. Unless they achieve a large number of sales this weekend they will have had just about 1 property per week go SSTC during August. June and July also saw very low numbers of properties go SSTC.

What are other people seeing in their localities?

As someone on HPC, or in the media, said recently - although there has been some pick up in activity in the property market (number of viewings, offer made, etc.) and some small rise in prices recorded by Indexes the number of successful completions remain at historical lows and the amount of money Estate Agents are generating from sales remains dismally low - in sum, the property market remains deep in recession.

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Housing hasn't got more expensive, cash has got cheaper. It is the price of cash that is more important because it is more volatile and uncertain. The supply of houses is roughly static, growing slightly, the supply of cash (or money) has been growing at more than 10% per annum for many years. If there is a collapse of the banking system there would be a contraction of the money supply by approaching 99%.

The price of cash (and consequently credit) is a much more important variable than the price of housing as far as the housing market is concerned because it is liable to vary more.

On the contrary, cash has got more expensive.

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