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A Prediction For The Coming Months

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As a few people have noted about the latest HBOS data showing a small YoY rise, the current low volumes of sales observed in the market may be what is giving rise to this apparent "return of confidence" to the market.

The houses that are selling are those where people are moving further up the ladder or to a similar house across the country, but NOT first timers.

For an exaggerated example, consider this:

Time 1: 10 houses sell, all roughly 80K each - mean is roughly 80K, high volume

Time 2: Only 2 "nicer" house sell for 90K, plus 3 for 80K - mean is roughly 84K, low volume

Time 1 to Time 2 = RISE of 5%

Now, this is good for the likes of HBOS, Gordon Brown, etc, as it helps to maintain the illusion of high prices, confidence etc (even though confidence is rapidly eroding anyway, we've already spent too much of our future earnings!)

But, consider what happens when eventually the discounted sales on low-end properties (flats, for example) emerge in the stats. At some point all those rabbit hutches are going to have to sell. With low volumes still prevalent, these falls are suddenly exaggerated - rather than exaggerating any rise, any fall is exaggerated!

Time 2: Only 2 "nicer" house sell for 90K, plus 3 for 80K - mean is roughly 84K, low volume.

Time 3: 1 "nice" house sells for 90K, 3 for 80k, 1 for 70K - mean is 80K, low volume

Time 2 to Time 3 - FALL of 4.7%

Time 4: 1 "nice" house sells for 90K, 2 for 80K, 2 for 70K, mean is 78K, low volume

Time 2 to Time 4: FALL of 7.1%

Just an idea. At the moment low volumes don't suit bears, but before long they could be our friend.

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probably, but whats more important is the buying public simply cant afford to purchase.

no amount of spin can change that. we in far too deep and prices are way out of line with the rest of the uk economy. they could tell people prices were booming at 25% a year and FTBs still couldnt buy. its a pointless exercise. soon they will accept that and stop putting out the spin.

1-3 years -40%

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Has anyone tried to think through the consequences of 'The Government's' - think Gordon/Prescott et al - present plan to get home ownership up to 75-80%.

What are their alterior motives for planning this?

Would this lead to a self-sustaining market?

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What Prezza and TB say, and what they do, are not necessarily the same thing. :P

Very recently we had 200,000 "new affordable FTB houses" scythed down to 20,000, combined with a government game of "let's make this awkward for the lenders so that two of the biggest backers walk away".

I do wonder if they're trying not to be drawn on this whole house-prices thing. But then I'm an overly generous chap at times :D

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What I am seeing locally (Durham) is that the market below 150k

has reasonably active buying and selling. Therefore the average price of houses 0-150k is going up. Therefore, the overall average (around 170k) is also going up, despite the market above 150k being stalled.

Supporting this, average time on market 0-150k is 123 days vs

215 days (!) for 150k+.

In other words, somewhat counter-intuitively, it's the houses below

the average which are pushing the average up.

I put this down to BTL/remaining FTBs buying the cheaper end of the market.


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