Wednesday, November 19, 2008

only fools rush in

House sales rise as prices fall

A property search website, Globrix, said price cuts on homes last week averaged £16,871 across the UK. The UK property market is in the middle of the worst slump in living memory because of the credit crunch and a subsequent mortgage drought. Average prices, according to the biggest lenders, have fallen by about 15% in the past year and sales have fallen by more than half.

Posted by mark @ 02:28 PM (1342 views)
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10 thoughts on “only fools rush in

  • Gosh they were quick to pick up on that one from … errr .. who? Glowbricks?

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  • japanese uncle says:

    As the King (not Mervyn) is singing from the other side of the moon. Wise men say, only fools rush in ♪♫

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  • Well I heard a different tune sometime ago. Last September there were 33,000 completed sales. There are approx 33,000 estate agencies so it means about 1 sale per estate agency last month. 7 times more in October ????? Pent up demand I forecast.

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  • “The average estate agency sold 7 properties in October, up from 6 in September”. And how many estate agencies were there in October compared with September?

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  • Achieved prices almost £17k down on asking prices. All this means is that sellers and EAs are still being unrealistic.

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  • fjcruiser, demand is a function of supply, and where they meet is the price point. This is a “buyer’s market” therefore we concentrate only on the demand side, and supply is highly inelastic (especially as all of the housebuilders are going bankrupt right now).

    If a melon costs 10p everyone will buy a melon and if a melon costs £100 then no-one will buy one. Ther is no mention of suppressed or “pent up” demand. There is only demand along along a curve:

    So as we can see, there is no concession to the rather fanciful notion of “pent up” demand so often trotted out buy the meeja. There is only a demand level at a certain price, and as demand goes down, so the price of housing tumbles. That’s all there is to it. Sorry.

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  • Maybe the ea’s will get it into their heads that if prices come down much further in a hurry they might be able to sell something and survive.

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  • As the house prices fall so does the number of pound notes (or should I say coins) that the EA’s receive – they need volume sales to survive.

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  • Paul,

    Demand is a function of price – not supply.

    Also, your chart doesn’t match your comments – it shows the same quantity of goods being sold at a lower price because of a shift in the demand curve – ie all available melons being sold at £100 (P1) and then at 10p (P2). The amount of melons sold is unaffected by price.

    The fact that house prices have only dropped 15% yet sales have dropped 50% suggests that supply is VERY elastic. I can’t think of a market where elasticity of supply is higher – if prices where to rise 20% next month willing sellers would return to where they were last year- ie supply would double. Supply is not simply determined by the quantity of goods in existance.

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