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Libertine

The Power Of Sentiment

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Just thought I'd report on a couple of incidents from the last few days.

- The general concensus around our office has been that house prices NEVER go down, everyone MUST buy as soon as possible and that MEW-purchased luxuries provide all lifes happiness. I have been roundly chastised for suggesting that prices are falling and the economy is tanking. This is from people whose opinions are formed from the tabloids.

Funny, then, that I overheared a discussion on Friday afternoon that contained the phrase "yeah, but he only got his house on just after prices started to collapse. He'll never sell it now with a price crash on the way !!". The reaction....nodding heads, wry smiles and general acceptance. :rolleyes: If my Star reading colleagues have heard it's happening then it's already started.

- Saturday, walking past a local EA, I noticed a couple of obvious FTB's making their way out. I got the usual urge to try and give them the HPC mantra but it wasn't needed ! Before Mr FTB had even finished closing the EA door, Mrs FTB confidently said "Well, if they're dropping the prices because they can't sell them then we might as well just wait a few months and see what happens". Hallelujah !!!

Purely anecdotal, of course, but the power of sentiment is, IMO, a big driver. The change in the media (BBC excluded) is becoming quite clear - particularly the printed press. Job losses, bad debts, falling prices, economy sliding, BTL dead etc..... Just wait until they start printing the "R" word.

How did the song go again...."Things can only get better, can only get better....."

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The change in the media (BBC excluded) is becoming quite clear - particularly the printed press. Job losses, bad debts, falling prices, economy sliding, BTL dead etc..... Just wait until they start printing the "R" word.

How did the song go again...."Things can only get better, can only get better....."

As much as the Labour Broadcasting Corporation might wish it, they don't have a monopoly in the media, sooner or later they'll have to start telling the truth or they'll look even more ridiculous than ever. ;)

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How did the song go again...."Things can only get better, can only get better....."

That's right - Interest Rates are not the main driver of buyers flooding the offices of Estate Agents - it's sentiment.

You can have Interest Rates as low as you like, and you can have unemployment as low as you like, but if people are uncertain about the future then the EAs will remain empty and sellers won't sell.

And when sales don't happen, price cuts will follow and gather momentum which will keep yet more people out of the market waiting for further falls.

Prices falling will be a kind of self-fulfilling prophecy and a downward spiral that will only bottom out when enough buyers come back in the market in sufficient numbers and I don't see why that should happen for the forseeable future.

And if you take the view that a cut in Interest Rates this week is a sign that all is NOT well with the economy - that only goes to strengthen people's sentiment against the housing market.

When Interest Rates were cut to 3.5%, sentiment was still good about the economy and that's why the bubble arrived leading to this false belief that low Interest Rates somehow automatically causes house prices to rise.

Now that the bubble has burst and sentiment has changed, there is nothing the Vested Interests can do about it, and they know it.

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A change in buyer sentiment is nice starter but the main dish is seller sentiment.

It's very much easier to change the opinion of somebody to a view that will save/make them money than it is to a view that will cost them money.

Or to put it another way; buyers want to hear that prices are falling but sellers don't. Those who are the position of being both, probably expect the best of both worlds.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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