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Bubble Pop Electric

The True State Of The Housing Market

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Following on from someone elses thread yesterday, I decided to do some investigating & put a couple of graphs together. Basically, relating to an article posted here, the suggestion was that the market is in much worse shape than it looks because the figures only reflect the houses sold, but doesn't measure the number of houses unsold.

The average house price by itself isn't actually much use without measuring the health of the market as well. It would be like a company reporting to the stock market on their gross margin per sale, but neglecting to say how many sales they had actually made. You need to see both sets of figures to get a clear picture.

In other words, if just 1 house sold in the UK this quarter for £180K, then the average house price would be £180K. If 100,000 houses sold at £180K, the average would still be £180K.

Because the market health is reported in the press by the average house prices, people have the impression that there have only been drops of 0.2%, and that consequently the market is in good shape & there is a reluctance to drop prices.

However....... as you can see on the graphs below, the total market value had dropped by almost 25%, or almost £20 BILLION between Q3 04 & Q1 05 - thats a phenomenal drop, and clearly the notion that the average prices have only dropped by 0.2%, etc, are not giving the public the true picture.

The truth would seem to be that the crash has already started, and that the average house price is just lagging behind, primarily because people are not being shown the right numbers.

Comments?

marketvaverage.gif

market_value.gif

post-2729-1126517867_thumb.jpg

post-2729-1126517963_thumb.jpg

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Nice work. It's very interseting to see how the two lines shadow until just recently then diverge.

What would also be intersting would be to see a graph showing amounts of profit made on selling the same house at different times. I'm not quite sure how you could get this data out but we need to find some way of correcting for the fact that it's higher-end houses that are selling now (due to lack of FTBs). This is keeping the average way up but the actually values of houses is falling.

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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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