Supply and demand

macaque_2

CLAPTON wrote: »

-there is nothing artifical about people freely making use of low interest rates (although actual borrowing rates aren't all that low)

-there's nothing artifical about people freely choosing not to sell now because they think they will get a higher price next year

-there's nothing artificial about purchasers refusing to pay current prices.

artificial means that there is a monopoly or cartel acting in unison to affect the price either directly or through with-holding the product

Take it easy. I am not saying that people choosing not to sell is artificial. I am just saying it's dumb. Artificially low interest rates were supposed to give the country a chance to unwind the property bubble. But, like a disorientated whale, the property market has swum straight back into the beach. Has it occurred to people what would happen to interest rates if the £ started a serious slide on Monday.

Afriend_2

macaque wrote: »

Demand does not give the vendor a unilateral right to name the selling price. All it means is that willing buyers will be found if the selling price matches their ability and willingness to pay. When prices are too high, turnover shifts to the left of the demand curve and that is where we stand today. Home owners are holding out for prices that leave the vast marjority of would be buyers out in the cold.

In a normal economy, prices should fall to restore a healthy turnover. This is not a normal economy however. Current levels of interest are so low that people with equity in existing properties are aquiring multiple homes as never before. This is creating an artificial shortage. We will have a genuine shortgage when the government starts erecting tents in the Royal parks.

Bulls have a fervent belief that prices will rise as they did in the 90s. Although rear view mirrors are useful, they are extremely dangerous when used as a primary means of navigation. Circumstances today do not compare to the 90s. We are at the wrong end of the demand curve, we are over indebted, interest rates only have one direction to go, and the prospect for incomes and jobs is as bad as we have seen for 40 years. If we do see high levels of wage inflation, it will be accompanied by even higher interest rates.

My prediction of 70% falls remains and remember this; I have always said the house price correction would take years to unwind.

Supply and Demand. Where's the supply section macaque?
Not to worry. I'll have a nap instead.

Generali

silvercar wrote: »

Being pedantic, that looks like a straight line, rather than a demand curve.

AIUI, mathematically a demand curve can be a straight line as Quantity demanded = m x price ^n..... defines the curve and if n = 1 and m<0 then the the curve is a straight line as shown.

CLAPTON

macaque wrote: »

Take it easy. I am not saying that people choosing not to sell is artificial. I am just saying it's dumb. Artificially low interest rates were supposed to give the country a chance to unwind the property bubble. But, like a disorientated whale, the property market has swum straight back into the beach. Has it occurred to people what would happen to interest rates if the £ started a serious slide on Monday.

You said ..... ' This is creating an artifical shortage'

As I say, if people freely choose to hold out for a higher price then that's their business .. it isn't a failing of supply demand theory, merely people having a different view to yourself about future movements in house prices.

I'ld also take issue about your use of the word 'artificial' in relation to interest rates... effective interest rates are not particlarly low atall... some lucky people with BoF linked mortgages could be benefiting from 'artificial' interest rates but they are relatively few.

And I don't think many economists would agree that the current low interest rates were intended to 'unwind the property bubble'... they were intended, along with QE to stop a catastrophic rise in unemployment and a collapse in the economy.


And while I'm here I'ld be interested in the evidence for your assertion that significant numbers are acquiring multiple houses due to equity in their existing houses.

HenryWeston

Lots of supply and no demand, or should i say no credit available in the quantities previously handed out to the masses.

silvercar

Generali wrote: »

AIUI, mathematically a demand curve can be a straight line as Quantity demanded = m x price ^n..... defines the curve and if n = 1 and m<0 then the the curve is a straight line as shown.

m can be any value to get a straight line. Straight line relies on n=1, but then the relationship is linear, so no curve.

For the relationship to be truly linear ie n=exactly 1, there would have to be no other factors influencing the relationship.

CLAPTON

from wikipedia


In mathematics, a curve consists of the points through which a continuously moving point passes. This notion captures the intuitive idea of a geometrical one-dimensional object, which furthermore is connected in the sense of having no discontinuities or gaps. Simple examples include the sine wave as the basic curve underlying simple harmonic motion, and the parabola. Curves that close in on themselves, such as a circle, are commonly referred to as a loop. In everyday use of the term "curve", a straight line is not curved, but in mathematical parlance curves include straight lines and line segments. A large number of other curves have been studied in geometry.






both right ?

chucky

HenryWeston wrote: »

Lots of supply and no demand, or should i say no credit available in the quantities previously handed out to the masses.

2009 credit is enough for 2009 house prices - nuff said

chucknorris

chucky wrote: »

2009 credit is enough for 2009 house prices - nuff said

Sorry sir, no logic allowed is on this thread, please find a thread where fantasy 70% falls are not envisaged to post on, this thread is reserved for the desperate. Silly bears are allowed to have fun too you know (even if they are bonkers)

(note to bears not suggesting you are all silly, but 70% come on, ooops fantasy disruption, please ignore)

nembot

Supply and Demand...:rolleyes: 'chuckles'