Thursday, October 1, 2009

Fudamentals don’t matter

House Prices Look Less and Less Likely to Be Affected by Unemployment

We've already commented about the unlikely possibility of unemployment having any significant negative effect on house prices in this recessionary cycle. Assetz just don't think it's going to outweigh the effects of significant lack of supply. We've now got the government admitting that long-term unemployment is going to be massively lower than previously predicted. House prices are not going to be pushed down by unemployment in the private sector, and by the time any public sector job reduction kicks in, private sector recruitment growth will be endemic, helping helping to cap peak unemployment. We are already seeing the companies that entered the recession early beginning to hire staff again, and we expect this flow to continue.

Posted by little professor @ 10:53 AM (1995 views)
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15 thoughts on “Fudamentals don’t matter

  • The yellow digger sector is still dragging its ar$e in the mud and may well get worse this year…. No pick up here…..

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  • Alternative headline:

    “House Prices Look Less and Less Likely to Be Affected by Reality”

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  • I’ve always avoided reading the Assetzzzzzz articles because of the general kicking they receive on here. I read that one and now I fully understand why. That first paragraph is verges on being unintelligible.

    “We’ve already commented about the unlikely possibility of unemployment having any significant negative effect on house prices in this recessionary cycle. Assetz just don’t think it’s going to outweigh the positive effects of significant lack of supply.”

    WTF are these people on? “Positive effects of significant lack of supply….” My gob is smacked.

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  • Does anyone actually believe this rubbish? I can’t understand how anyone can take them seriously!

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  • mark wadsworth says:

    What Fubar says: “the positive effects of significant lack of supply” is at least ruthlessly honest about the intellectual underpinning of our political-economic system, which I shall henceforth refer to as “home-owner-ism”.

    Like any other -ism (socialism, corporatism etc), there is a select group (who admittedly make up two-thirds of the population in numbers) who are so desperate to eke out little tax-free, effort-free gains for themselves, despite the wider overall cost to society (of which they themselves are members, net overall, they end up worse off – that’s the irony). You can also call this “rent seeking” or “privatising gains, socialising losses”. Either way, just like socialism or corporatism, the whole economy runs at considerably less than its full potential (which means you have to work all the harder for the same net reward).

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  • Of course, the more people out of work there are the more people can pay over the top prices. Perfectly sensible from Stuart Lawz that.

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  • To mark wadsworth – Well said!

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  • Absolutely no details, statistics or evidence given whatsoever. They don’t even mention anything about supply after alluding to it at the start of the article. I suppose we’re supposed to believe them just because they think it.

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  • cynicalsoothsayer says:

    “there are many other easier costs to cut first of all – anybody fancy the end of Quangos for example ?”

    Quangos employ people too, so cutting them also results in higher unemployment.

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  • I guess what they’re saying is that this time around there are various support schemes to pay mortgage interest for unemployed, low interest rates anyway and a 1-2 million strong army of ‘blinkered’ investors.

    Rightly or wrongly these things will make this a different HPC the early nineties.

    It could if we were to see significant further falls make it far worse as things start to magnify themselves, time will tell on that one.

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  • I read the article and then sat back and had a very long think about Stuatz latest offering – I wonder if he was Hans Christian Anderson in a former life?

    Anyway my only gripe with this one is that it should have had a Comdey Club warning attached to it.

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  • the number cruncher says:

    The black swan awaits those who like certainties and trends that will never end.

    Nice post – 4. Mark – I think you have the basis of a good book or at least a channel 4 documentary –

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  • I take it that by ‘lack of supply’ assetz are talking about the cronic lack of home owners who wish to sell but don’t register with estate agents due to being well aware that nobody will buy their shoe-box for vastly over inflated prices?

    oh right… thought so..

    That article suddenly makes sense.

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  • greenshootsandleaves says:

    Question to Mr Law: ‘Would he similarly dismiss a sudden (and miraculous) rise in employment as having little or no effect on house prices?’
    His ‘ignore the fundamentals (and buy!)’ message seems to have become the industry’s leitmotiv of late. Comes in a variety of flavours, including ‘Why not just get on with your life? (i.e. buy now!)’. By an amazing coincidence this is precisely what smugdog has advocated on at least a couple of occasions on hpc.
    Don’t think! Buy now!
    Don’t wait for the current stand-off to end! Buy now!
    Buy! Buy!
    I have now heard of several people who have abandoned (i.e. handed over to the bank) property they owned in Spain, citing a desire to ‘put an end to the anxiety (and the expense) and simply get on with their lives’. Translated to the UK the same concept would mean vendors accepting that this is no longer 2007 and pricing their property realistically. Surely, if the property one is trying to sell is not one of the cherries those cash-rich buyers are interested in, then this too would be a way to get on with one’s life!
    It can work both ways, smugdog!

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  • new user 2007 says:

    “In any case, by the time public sector job reduction kicks in, private sector recruitment growth will be endemic, helping helping to cap peak unemployment. We are already seeing the early companies that entered the recession in September 2007 beginning to hire staff again and we expect this to flow through to all of the rest of the economy over the next year or so.”

    He has moved from housing market genius (rode the wave in good times and has gotten everything wrong in the last 2 years) to labour market guru (with a direct line to companies and their HR departments). The mantle of godhood must make Mr ASSetx quite wary:)

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