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But I Thought There Was "pent Up Demand" ?

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But I Thought There Was "pent Up Demand" ?

Mike

what we are seeing now is the pent up supply. All the people who were holding off selling during the dip causing the under supply are now realising this is the highest price they can hope for and are flooding the Market.

Hips is just an excuse. This over supply started long before the hips announcement.

Demand can only be realised at affordable prices.

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'Pent-up demand' simply does not exist as a concept.

Demand only counts as demand if the money is available to pay. If someone doesn't have the funds to buy the commodity in question then their desire for it does not count as demand in any way at all.

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what we are seeing now is the pent up supply. All the people who were holding off selling during the dip causing the under supply are now realising this is the highest price they can hope for and are flooding the Market.

Hips is just an excuse. This over supply started long before the hips announcement.

Demand can only be realised at affordable prices.

It always has amused me how people seem to think that the HiPs pack stop sellers from selling. At £300 it is hardly alot of money to spend

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There is pent up demand for Buggati Verons.

http://en.wikipedia.org/wiki/Bugatti_Veyron

Best car ever made perhaps and is sure to keep it's value in the long term, what a great investment. I've been told, by the media, their prices are holding well and might well go up 23% by 2014.

I'd buy one tomorrow if....

Edited by TheCountOfNowhere

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'Pent-up demand' simply does not exist as a concept.

I think you're missing the relevance to the abolishment of HIPS. House prices are sticky because people live in their houses. Lots of times a house will be advertised for sale to see if someone will purchase it at that price. If no one does then the owner is still perfectly happy to continue living there. If someone is prepared to pay around the asking price then the owner will sell and pocket the money or purchase somewhere else. This is what some of the Sell to Rent posters on this site did.

You are confusing the increase in houses being advertised for sale with an increase in the number of forced sellers. This doesn't seem to be the case. If and when interest rates increase then your hypothesis may turn out to be correct, particularly if an increase in interest rates causes unemployment to rise.

I think your conclusion is merely wishful thinking.

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I think you're missing the relevance to the abolishment of HIPS. House prices are sticky because people live in their houses. Lots of times a house will be advertised for sale to see if someone will purchase it at that price. If no one does then the owner is still perfectly happy to continue living there. If someone is prepared to pay around the asking price then the owner will sell and pocket the money or purchase somewhere else. This is what some of the Sell to Rent posters on this site did.

You are confusing the increase in houses being advertised for sale with an increase in the number of forced sellers. This doesn't seem to be the case. If and when interest rates increase then your hypothesis may turn out to be correct, particularly if an increase in interest rates causes unemployment to rise.

I think your conclusion is merely wishful thinking.

Yes, that happens in some Noddy World where people bought with their own cash laugh.gif in that world the psychological trauma amounts to "Oh, this house I (hopefully) bought ages ago is not really worth 400k, it`s worth more like 150 - 200k, Oh, Oh dear, Oh well."

In the real world of massive leverage the Trauma is more like " This house which I rented from the bank at 400k, and on which I will probably pay the bank double that in in interest is not worth even half that any more ph34r.gif my pants feel a bit dirty, Oh dear, Oh F*uck I`m going to be working every day to pay a debt that leaves me with f*uck all at the end, that`s not what the advisor said, Oh dear, Oh f*uck my pants are feeling a bit soiled again, Darling, did you say your friend went Bankrupt? how did they do it, I think I`ve pissed myself, I don`t want to rent from a taxpayer owned bank all my life Dear, lets phone your friend" etc etc, big crash ahead IMO.

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I think you're missing the relevance to the abolishment of HIPS. House prices are sticky because people live in their houses. Lots of times a house will be advertised for sale to see if someone will purchase it at that price. If no one does then the owner is still perfectly happy to continue living there. If someone is prepared to pay around the asking price then the owner will sell and pocket the money or purchase somewhere else. This is what some of the Sell to Rent posters on this site did.

You are confusing the increase in houses being advertised for sale with an increase in the number of forced sellers. This doesn't seem to be the case. If and when interest rates increase then your hypothesis may turn out to be correct, particularly if an increase in interest rates causes unemployment to rise.

I think your conclusion is merely wishful thinking.

Unfortunatly most people are thick and will think if they can't sell at near 2007 price then they will just take it off the Market until things get back to 'normal' which is what they did throughout 2008/09 and which is why we are seeing a surge now.

These people don't understand that although their house has dropped in value so too has the next one up the 'ladder' meaning that the step is cheaper.

High prices only benefit downsizers and people moving out of the country.

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I like to think of it as "Pent up Numptiness", there was a choice, some time ago, when the land was flowing with cheap credit and "everyone" was getting "On the ladder" to be either a sheeple Numpty or an independent thinker. Unfortunately many chose the easy option of "Follow the Numpty". Conversations up and down the land went like "Darling, Jane and Frank are being Numpties, can we be Numpties too?" "Eh, not now dear, I`m busy reading housepricecrash.co.uk" "Eh, darling, do you know that Blow Job I gave you five minutes ago?" "Er, yes....." "Well you won`t be getting another one unless we can be Numpties too" "Oh f*uck it!" etc etc ,we can`t underestimate the effect of "Numptiness" being replaced with "Fearfulness" in this crash. Most sheeple will default to being a f*uckwit when others are being f*uckwits, but they will also cack their pants and act accordingly when others are doing so. Don`t be a Numpty!

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I like to think of it as "Pent up Numptiness", there was a choice, some time ago, when the land was flowing with cheap credit and "everyone" was getting "On the ladder" to be either a sheeple Numpty or an independent thinker. Unfortunately many chose the easy option of "Follow the Numpty". Conversations up and down the land went like "Darling, Jane and Frank are being Numpties, can we be Numpties too?" "Eh, not now dear, I`m busy reading housepricecrash.co.uk" "Eh, darling, do you know that Blow Job I gave you five minutes ago?" "Er, yes....." "Well you won`t be getting another one unless we can be Numpties too" "Oh f*uck it!" etc etc ,we can`t underestimate the effect of "Numptiness" being replaced with "Fearfulness" in this crash. Most sheeple will default to being a f*uckwit when others are being f*uckwits, but they will also cack their pants and act accordingly when others are doing so. Don`t be a Numpty!

very eloquently put. :lol:

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In my book, "pent up demand" means people who would buy at a slightly lower price

Problem is if prices fall, then they may wait until they have bottomed out (or mortgage is a lot less than renting) in which case prices have a long way to fall before the pent up demand translates into actual demand.

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In my book, "pent up demand" means people who would buy at a slightly lower price

Problem is if prices fall, then they may wait until they have bottomed out (or mortgage is a lot less than renting) in which case prices have a long way to fall before the pent up demand translates into actual demand.

Renting is a no brainer in my part of Lambeth. Either you rent, or you pay twice as much for the mortgage on a similar property.

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'Pent-up demand' simply does not exist as a concept.

Demand only counts as demand if the money is available to pay. If someone doesn't have the funds to buy the commodity in question then their desire for it does not count as demand in any way at all.

Yes you have to have the money, but "pent-up demand" is just media speak for the fact that we demand more (in economic terms) at lower prices.

For example, if houses were free I would buy every house in the world. If houses were 50k i might buy two. With houses at 200k I buy zero.

However, "There is a lot of pent-up demand" is just a meaningless truism equivalent to saying "if prices were lower, a lot more people would be willing and able to buy"

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Yes you have to have the money, but "pent-up demand" is just media speak for the fact that we demand more (in economic terms) at lower prices.

For example, if houses were free I would buy every house in the world. If houses were 50k i might buy two. With houses at 200k I buy zero.

However, "There is a lot of pent-up demand" is just a meaningless truism equivalent to saying "if prices were lower, a lot more people would be willing and able to buy"

It's not totally meaningless because there are undoubtedly a lot of people out there who would like to buy A house (not two or three), but absolutely cannot afford it untill the prices are much lower. These people could easily be living in cramped or unsatisfactory accomodation, esp if in full-time work. That 'pent-up demand' can be differentiated economically from those who would simply like more. Perhaps pent-up need would be a better term, or inadequate supply.

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I have a pent-up demand for chocolate right now. If someone delivered loads of Galaxy bars, Mars, Thorntons, Toblerone etc., I wouldn't want to eat them all, so I'd then have a surplus.

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It's not totally meaningless because there are undoubtedly a lot of people out there who would like to buy A house (not two or three), but absolutely cannot afford it untill the prices are much lower. These people could easily be living in cramped or unsatisfactory accomodation, esp if in full-time work. That 'pent-up demand' can be differentiated economically from those who would simply like more. Perhaps pent-up need would be a better term, or inadequate supply.

In economic terms, why does it matter if someone wants to buy a house as a holiday home or as a relief from cramped rented accomodation?

Either they are willing and able to buy the house for £X or they are not. If they are, then they are part of the demand for that house.

Whatever price the house is today, there will always be people for whom it is just ever so slightly too expensive to afford. Therefore whether houses are 6x incomes or 3x incomes there will always be an element of this so-called "pent-up" demand.

Sure you can subdivide the group of "pent-up demanders" into those who already own a house and those who don't, but in terms of the effect on house prices their background doesn't matter - just their ability and willingness to pay.

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"There is a lot of pent-up demand" is just a meaningless truism equivalent to saying "if prices were lower, a lot more people would be willing and able to buy"

You're right insomuch as it is meaningless. The entire essence of the law of supply and demand is that the market finds an equilibrium between supply and demand at a certain price level. Quite obviously demand will rise as prices fall; the same could be said for any commodity, product, or service you can think of.

To describe this as 'pent up demand' is idiotic and the invention of estate agents!

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In economic terms, why does it matter if someone wants to buy a house as a holiday home or as a relief from cramped rented accomodation?

Either they are willing and able to buy the house for £X or they are not. If they are, then they are part of the demand for that house.

Whatever price the house is today, there will always be people for whom it is just ever so slightly too expensive to afford. Therefore whether houses are 6x incomes or 3x incomes there will always be an element of this so-called "pent-up" demand.

Sure you can subdivide the group of "pent-up demanders" into those who already own a house and those who don't, but in terms of the effect on house prices their background doesn't matter - just their ability and willingness to pay.

Well it's certainly true that 'demand' has such a specific economic meaning such that pent-up demand is a nonsense in those terms. But I don't think the media are just talking about price-sensitivity, indeed they're very loathe to make the connection between low transaction numbers and affordability - they're much happier to latch onto reduced availability of mortgage credit causing the 'pent-up' factor.

However, I think it's more a social phenomenon they refer to. FTBs transactions have been low for a prolonged period such that people are in rented accomodation who historically would 'normally' have bought by now, and others with families are in flats where they would normally already have traded up. That log-jam of thousands of buyers stuck unable to buy or in property they would ideally have traded up from that the media (incorrectly) refer to as 'pent-up demand' is far greater in number than the marginal group you refer to for whom it will always be slightly too expensive. But like you say, most of these 'pent-ups' are either not willing and/or not able to pay, they can only wait for house prices to come to them, or for their pay to inflate while HPI is stagnant. When that point comes, the level to which demand has been suppressed will be evident.

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  • 146 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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