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Realty Cheque

Do Buyers And Sellers Really Set Prices?

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I've often been told that it's the buyers and sellers in the housing market that set the price. More buyers, prices go up. More sellers prices go down. For some time now, according to the many reports I've read, sellers have been outstripping buyers. So why are house prices still rising? Are the theories wrong, the reports flawed, or is it just pure VI price ramping?

Edited by Realty Cheque

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Property isn't really a very efficient market, it's very sticky, lacks transparency and up to date pricing information.

Most property developing isn't really 'speculation' in the true sense, it's actually arbitrage in most cases, i.e. buying at auction, a quick lick of paint and then putting the property on the 'open market' and exploiting the disparity, thanks to the naivety and pliability of buyers in the end market.

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I've often been told that it's the buyers and sellers in the housing market that set the price. More buyers, prices go up. More sellers prices go down. For some time now, according to the many reports I've read, buyers have been outstripping sellers. So why are house prices still rising? Are the theories wrong, the reports flawed, or is it just pure VI price ramping?

Precisely because there are too many buyers. Basically if there are more buyers than sellers, the buyers compete harder to buy the houses, so prices go up. However, if there are more sellers than buyers, then the sellers have to compete harder to get buyers to buy their place, and so have to lower their prices to attract buyers. Basic economic theory: law of supply & demand.

What will cause a crash will be if suddenly the buyers dry up yet lots of people decide to sell up (which will happen once people realise that prices can/will fall and suddenly get very nervous about catching the proverbial falling knife). That will force prices down as the sellers will be competing ferociously for the few buyers that are left in the market.

Taking this a step further, if all the wannabe FTBs were to get together and decide to boycott the market for a period, then prices would of course fall. The reason this isn't happening is because the majority of people still believe that property is a one-way bet and so they must get on the property ladder at whatever cost - they don't want to boycott the market!

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cos every man and his dog watched tv from 2001-2005 and went property nuts thats what.

combined with favourable rates and step by step instructions. they worked like tv ants. in long lines they made their way into the whole country carrying anything they could find property wise - away. they sapped up all the cheap dwellings first and attempted to rent tham back to the very people who should have got them. with mixed results. often you could see soldier btls jon forces for a big property and chop up the dwelling, carrying it back to the nest for consumption via 5 seperate btl ants.

the bbc and c4 laid a scent trail for them to follow. often accross the channel into spain ect, where the favourable climate enhanced the destruction.

whole swathes of virgin forrest terrace in the rain valleys of burnley were consumed overnight. within 3 years teh scurge of the new btl ant was rife all along the uk, pricing out local ftb ants every step of the way.

the country is taking a property bath in btl ants.

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Precisely because there are too many buyers. Basically if there are more buyers than sellers, the buyers compete harder to buy the houses, so prices go up. However, if there are more sellers than buyers, then the sellers have to compete harder to get buyers to buy their place, and so have to lower their prices to attract buyers. Basic economic theory: law of supply & demand.

However, as buyers are, in general, not using their own money but having to borrow, then both the availability and cost of the capital used enters the equation. Over the past few years the world (including the UK's banking system) has been flooded with an excess of cheap money. You'll be pleased to know that is now being reveresed albeit very, very slowly.

Edited by 737

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However, as buyers are, in general, not using their own money but having to borrow, then both the availability and cost of the capital used enters the equation. Over the past few years the world (including the UK's banking system) has been flooded with an excess of cheap money. You'll be pleased to know that is now being reveresed albeit very, very slowly.

See the example of the pair who lost their deposit on the newbuild flat. They had an income that would "allow them to borrow the 200K they needed", but the lenders would not lend it to them as they valued the flat for less.

Billy Shears

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I've often been told that it's the buyers and sellers in the housing market that set the price. More buyers, prices go up. More sellers prices go down. For some time now, according to the many reports I've read, sellers have been outstripping buyers. So why are house prices still rising? Are the theories wrong, the reports flawed, or is it just pure VI price ramping?

Its ok, its a bubble :)

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  • 302 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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