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Tired of Waiting

Rics' Ratio Of Sales To Unsold Stocks, July 2010

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RICS "Ratio of sales to unsold stocks on surveyors’ books",

New, updated chart - July 2010 - 2nd chart below

This chart has been the best forecast tool for short term (2 to 6 months) direction of House Prices.

The chart below (1984-2009) indicates that:

Annual House Prices change (HP) followed Sales To Stock Ratio (STSR), 2 to 6 months later.

(Monthly changes should happen sooner though.)

RicsSlack.gif

The older chart above (1984-2008) matches, historically:

- A STSR of around 33 to HP stability = zero HP change

- On average STSR below 33ish have caused prices falls, and STSR above 33ish have caused prices increases.

The new chart below (up to July 2010) shows:

- Current STSR looks to be around 24 now (and should keep falling. Let's not forget that!).

- In the past a 24 STSR has meant an annual house price fall of around -8%. (But if STSR keeps going down, prices will fall even more.)

July 2010:

ricssalestounsoldstockj.png

Sources: RICS.

Link to Source

July 2010[/b] http://www.rics.org/site/download_feed.aspx?fileID=7173&fileExtension=PDF Page 2)

Edited by Tired of Waiting

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Nice! Definitely turned down and will pull HPI down forthwith. The mainstream media are being remarkably bearishly forward looking today. It would be an easy one to ignore or spin.

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impressive! Very high correlation between those two data sets.

Yep. First time I saw that chart I had the same surprise. But then, later, one day I realised that they are measuring almost the same thing. I mean, merchandise is accumulating on the shelf = prices are too high. And vice versa.

This STSRatio is just measuring supply and demand. No wonder it points to short term price changes. Right?

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Nice! Definitely turned down and will pull HPI down forthwith. The mainstream media are being remarkably bearishly forward looking today. It would be an easy one to ignore or spin.

'Tis nice. :) I really like that chart.

And let's do a little exercise here: Can anyone think of anything that could stop that little line going even further down?

I mean, even playing devil's advocate:

1) What could bring more buyers into the market?

2) What could reduce the number of sellers in the market?

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RICS "Ratio of sales to unsold stocks on surveyors’ books", July 2010

This chart has been the best forecast tool for short term (2 to 6 months) direction of House Prices. (See 2nd chart, below.)

(Source: RICS - July 2010[/b] http://www.rics.org/site/download_feed.aspx?fileID=7173&fileExtension=PDF Page 2)

ricssalestounsoldstockj.png

The chart below (1984-2008) indicates that:

(Annual) House Prices change (HP) followed Sales To Stock Ratio (STSR), 2 to 6 months later.

(Monthly changes should happen sooner though.)

The chart matches, historically:

- A STSR of around 33 to HP stability = zero HP change

- On average STSR below 33ish have caused prices falls, and STSR above 33ish have caused prices increases.

- Current STSR (see chart above) looks to be around 24 now (and should keep falling. Let's not forget that!).

- In the past a 24 STSR has meant an annual house price fall of around -8%. (But if STSR keeps going down, prices will fall even more.)

RicsSlack.gif

Source: RICS. Link to Source

Very good ToW. V good.

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just wondering why the 2007 peak price ...Isnt.

OIC, its not prices, but the rate of change in prices.

yes...supply and demand here.....lower lending =lower demand.

Edited by Bloo Loo

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just wondering why the 2007 peak price ...Isnt.

OIC, its not prices, but the rate of change in prices.

Exactly, annual change, it was above zero until 2007.

( "OIC"? I've just Googled it, and got: "Opioid-Induced Constipation" :ph34r: I do hope you get well soon Bloo Loo. )

yes...supply and demand here.....lower lending =lower demand.

Exactly. No wonder they match so well - merchandising not selling, piling up.

Actually, it is even worse than your usual retail merchandising, as the retailer would just order less from suppliers.

Not here, in the housing market. :) They keep comin'.

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Exactly, annual change, it was above zero until 2007.

( "OIC"? I've just Googled it, and got: "Opioid-Induced Constipation" :ph34r: I do hope you get well soon Bloo Loo. )

Exactly. No wonder they match so well - merchandising not selling, piling up.

Actually, it is even worse than your usual retail merchandising, as the retailer would just order less from suppliers.

Not here, in the housing market. :) They keep comin'.

High! Low!..need my next fix.

Oh I See.

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Oh, I see. Thanks.

no no no.

you are supposed to say...Sweet. I say Dude, you say sweet.....oh forget it.

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RICS "Ratio of sales to unsold stocks on surveyors’ books",

New, updated chart - July 2010 - 2nd chart below

This chart has been the best forecast tool for short term (2 to 6 months) direction of House Prices.

The chart below (1984-2008) indicates that:

Annual House Prices change (HP) followed Sales To Stock Ratio (STSR), 2 to 6 months later.

(Monthly changes should happen sooner though.)

RicsSlack.gif

Am I the only one that sees a pattern here?

Capture2.PNG

post-13143-1281462191648_thumb.png

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Am I the only one that sees a pattern here?

Yes, I mean, no, I saw that pattern as well. :)

If it goes down that much it would mean prices falling by 20% per year.

If STSR suddenly stays flat (by some miracle) it would still mean prices falling by some 8% per year.

Reality will probable be between these 2 scenarios above?

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