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sighmoon

Council Of Mortgage Lenders Don't Know Economics

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This is a passage from the Telegraph article linked above - 'government about to con the consumer'

"A report from the Council of Mortgage Lenders warned that as many as 31 per cent of properties on the market have been put there to "test the water", and therefore might not become available if the vendor has to pay for a Hip. This, it warns, could reduce market liquidity, the volume of transactions and ultimately house prices."

This seems ignorant of economics. Normally, you would think that if supply were reduced, prices would go up, not down.

Are the CML just casting around for a scape goat cos they know their nest is becoming unravelled?

Or maybe this is a special case because the demand is lead by supply (people trading up)?

Or maybe they're just clueless?

Or maybe it's me?

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This seems ignorant of economics. Normally, you would think that if supply were reduced, prices would go up, not down.

If 31% of people don't put their houses on the market and sell, this means their will also be 31% less buyers (assuming they were not STRers!). Also if prices do slide because of this, sentiment will be not to buy a depreciating asset.

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People who 'test the water' are not properly committed. These would never consider a transaction at anything other than their price.

All HIPS will do is filter out those people who would have chased the market down.

Those people who DO have to transact will also have to accept the credit tightening situation, HIPS or no HIPS.

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normal economics work in normal perfect markets, the uk housing market is far from perfect, lots of barriers to entry and exit, limited land supply from developers, land banks that lock land for years before any property is built, and estate agents that are constantly looking for a new ceiling price operating more like oil cartels, oligopolies, and a buying public that is being bombarded with housing propaganda, its a miracle market and prices only go up and always above inflation!

Recently we have seen information in the uk housing market improving.

2002 : Average House prices : Free sites give average prices for an area

2004 : This website

2004/5 : Actual House prices : Free sites give the actual price a house sold for

In future :

HIPS : removes a barrier to entry, and introduces a barrier to exit. In my view the barrier to exit will be minimised by estate agents taking the up frount cost.

Lan bank Tax : developers will be taxed for holding property with planning permisson, big incentive to buy land and then apply for planning permission. and build on any land that already has planning permission.

HIPS will continue the trend of improving knowledge in the uk housing market, the housing market is becoming more perfect and as it does it is becoming more and more obvious to the populus that prices have risen to high and houses are vastly overvalued....

Edited by moosetea

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My experience recently would suggest that about 70% of sellers are testing the water, with the 'It would be nice to move, but if I dont get top price for the property then I will just say no' seems to be the attitude of most sellers.

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If 31% of people don't put their houses on the market and sell, this means their will also be 31% less buyers (assuming they were not STRers!). Also if prices do slide because of this, sentiment will be not to buy a depreciating asset.

But are these houses really on the market. If a house is advertised at a price that is taking the p, is it really for sale. I'm sure that if an eccentric billionaire went around knocking on random doors, and offering people twice what their property is worth, then a lot of owners would sell. If I say that I would sleep with anyone who offers me £1 million quid, does that make me a prostitute? I don't think it would.

Billy Shears

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Billy you complete and utter tart

If you can find an easy way for me to get my hands on £1 million I'll be happy to publish full page ads in the national press where you call me much worse things than that.

Billy Shears

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If you can find an easy way for me to get my hands on £1 million I'll be happy to publish full page ads in the national press where you call me much worse things than that.

"Billy" isn't such a bad name!

;):ph34r:

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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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