bears all Posted December 7, 2005 Share Posted December 7, 2005 According to the Press Association in Tuesday's newsblog, the CML is predicting lower transaction numbers in the next two years (down to 920000 p.a. from 970000 this year and over 1 million in 2004). So they think the market is going to shrink further. On the other hand they're also saying prices will rise. I don't get this. People need to move house, and falling transaction numbers indicate that prices are too high already. So where's the slack in the pricing that allows for rises? Quote Link to comment Share on other sites More sharing options...
2005 Posted December 7, 2005 Share Posted December 7, 2005 According to the Press Association in Tuesday's newsblog, the CML is predicting lower transaction numbers in the next two years (down to 920000 p.a. from 970000 this year and over 1 million in 2004). So they think the market is going to shrink further. On the other hand they're also saying prices will rise. I don't get this. People need to move house, and falling transaction numbers indicate that prices are too high already. So where's the slack in the pricing that allows for rises? Did they say prices will rise or mortgage lending will rise. If they said mortgage lending will rise then they are anticipating more people re-mortgaging or releasing equity on their homes. This is not the same as house prices rising. Lower transaction means a slowing market - less houses will sell either because there are less houses around (prices could go up) or less people buying (prices could go down). As most people are reporting a glut in homes for sale that are sitting around for a long time without selling I would anticipate that lower transactions will result in lower house prices because it is a buyers market. Quote Link to comment Share on other sites More sharing options...
Guest The_Oldie Posted December 7, 2005 Share Posted December 7, 2005 This could be achieved by EAs putting houses on Rightmove for ridiculous amounts, then dropping to a more reasonable price after a short time. I believe that Rightmove figures are based on the original asking price. I noticed a new listing this morning at £299,000, £100,000 more than any house has ever sold in that road! Quote Link to comment Share on other sites More sharing options...
Mildura Posted December 7, 2005 Share Posted December 7, 2005 This could be achieved by EAs putting houses on Rightmove for ridiculous amounts, then dropping to a more reasonable price after a short time. I believe that Rightmove figures are based on the original asking price. How will this make prices rise? Quote Link to comment Share on other sites More sharing options...
Guest The_Oldie Posted December 7, 2005 Share Posted December 7, 2005 How will this make prices rise? It wouldn't make them rise, but it would make the rightmove figures show that they were rising, which is what EAs need to boost confidence. Quote Link to comment Share on other sites More sharing options...
Guest consa Posted December 7, 2005 Share Posted December 7, 2005 Falling Prices and Rising Prices at the same time??????:- Month 1 (sales) house A = 100 house B = 100 Flat A = 50 Flat B = 50 Average price = 75 Month 2 (sales) house A = 90 house B = 90 house C = 90 Flat A = 40 Average price = 77.5 You see from the above illustration how easy it is to make the price go up when in fact it is going down, from this example the figure can be manipulated to suit, but there will come a time when it will become impossible to mask it this way, the longer it goes on the harsher the correction will be when the lower end sales revive, see below:- From month 2 above: Month 2 (sales) house A = 90 house B = 90 house C = 90 Flat A = 40 Average price = 77.5 Now look what happens when we add two more flats to even things up a bit Month 2 (sales) house A = 90 house B = 90 house C = 90 Flat A = 40 Flat B = 40 Flat C = 40 Average price = 65 OUCH!!!! Quote Link to comment Share on other sites More sharing options...
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