Sunday, August 16, 2009

MSW updates her view

House Prices Analysis

1.08:45 in MSW and Kate discuss prices. Its all "obvious" - although i agree with MSW i am still reminded by Joe Granville's matra.....

Posted by techieman @ 02:38 PM (1273 views)
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4 thoughts on “MSW updates her view

  • Merryn’s basic point was that the only buyers in the current market are those with plenty of equity or a huge deposit. over time, these people with money who want to buy will have bought and after that, nothing will be left to support current asking prices.

    In honour of Joe Granville, I decided to imagine how prices might keep rising. Here’s my shot:

    Although the number of people with large amounts of equity or big deposits will probably tend to fall as unemployment rises, these well heeled buyers will not completely disappear. So if the number of sales drops lower while typical FTBers are priced out, then prices will still reflect transcations by the minority of people who can afford to buy and might even keep going up. Unless the credit markets unlock, most buyers will not be able to participate. I’m not sure if this is viable in the long term but it seems possible that we will see higher prices for a year or two.

    (Note that this is just a little contrarian game I’m playing. Price falls late this year seem more likely to me at the moment.)

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  • happy mondays says:

    @ Quite guy, are you taking into account repossessions that might occur if unemployment hits the 3m marker ? which looks like it will as unemployment is expected to keep rising for a few years yet.. Also inflation, oil is on the up again.Banks will raise interest rates as soon as they can…Oh it’s such a game of chess..who knows for sure.

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  • quiet guy, I have often mooted this scenraio too.

    There’s a flaw I think in that the level of transactions will not sustain the market (as you say), but the people buying in will be vastly outweighed by the people selling out ‘involuntarily’.

    I know that the headline house price inflation figures don’t include auctions which are the main conduit for repossessions, but the land registry figures do (don’t they?).

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  • after the elections, taxes will have to be raised and then the Sh*t will hit the fan….

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