Jump to content
House Price Crash Forum
Sign in to follow this  

All Free Markets Cycle In Value.

Recommended Posts

For the sake of this post it would help the explaination if you briefly think of an open air market, the kind Micheal Palin might walk through in india.

All free markets cycle in value.

This is thanks largely to specialization. Following the evolution of specialization (everyone does a specific job) the greater public became very, very poor at evaluating the cost of producing/providing any goods or services other than their own.

For this reason prices are subject to estimates based on the knowledge available to a lay person. This knowledge is poor, incomplete and often full of bogus information. This leads to a misevaluation of the cost to produce or supply goods or services, the lay person of which almost everyone is, may overestimate or underestimate a price.

Currently people believe property is worth much more than the cost to produce it.

The cost of producing a property has not increased twofold in five years. The price increase is therefore an artificial one, a bubble.

A property is a durable consumer good, they are produced at a cost, that cost is dependent on many things, from the price of bricks and cement to the length of time it take to train an electrician, many factors contribute to the actual cost of producing a property. However none of these costs have increased dramatically enough to justify the current high market retail price.

Some people have argued that land has increased threefold and land is required to produce a property and since land cannot be produced the price rises are justified. This however is simply a falsehood.

Most resource used in the production of goods cannot be produced and are finite in source, from oil, to gold, to stone, to iron, to glass. Property production will run dry of bricks, cement and glass long, long before all the land is used. Does anyone actually believe every half acre in the world has enough materials under the surface to produce a detached house? Land is plenty.

These prices have been fellated by the efficient but ignorant specialization economy. That is the nature of the beast, it’s the price we pay for cheap high quality goods and services. The ignorant dictate the extent of the cycle. That is why nobody can control it, it is controlled by a lack of information and understanding, a situation most of us find ourselves in, when purchasing goods or services. That is why profit is made, that is why the economy grows. It’s the mysterious acceptable profit margin, the mark up, the reason why.

When people start to collectively get it so wrong it is propogated by the sellers, right up until somebody shouts wait a minute you can make those in three months! They're not worth six years wages!

In ye olde times peddlers of goods with such riddiculous mark ups would be burned to the stake, in attempt to ease the embarassment of all those foolish enough to part with their cash.

Now there's a thought.

Share this post

Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 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%

  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.