Supply and demand

HAMISH_MCTAVISH

chucky wrote: »

2009 credit is enough for 2009 house prices - nuff said

Blindingly obvious, isn't it....

So simple even a monkey should be able to get it.;)

Generali

chucky wrote: »

2009 credit is enough for 2009 house prices - nuff said

...at 2009 levels of transactions. The level of transactions is way below what would be considered normal so presumably there are a lot of frustrated buyers and sellers out there.

the_ash_and_the_oak

Generali wrote: »

...at 2009 levels of transactions. The level of transactions is way below what would be considered normal so presumably there are a lot of frustrated buyers and sellers out there.

This is the thing - my parents having this problem - can't sell (reduced price a bit but thats not really the problem - lots of offers - inc above orig asking price - but the buyers needing to sell their flats first)

Just kinda hoping everyone is happy with what they've got imo

IveSeenTheLight

Generali wrote: »

Demand is a cumulative function of those willing and able to buy at any given price. Supply is similarly a function of those able and willing to sell at a price.

Supply must equal demand in a free market for the same reason that the number of buyers must equal the number of sellers: a buyer needs a seller and a seller needs a buyer!

I do not agree with your second paragraph Generali.
Supply does not have to equal demand in a free market.

There will be occasions when there is more supply than demand, thus it is a less competative market and the price is likely to lower while the sellers (supply) compete for the limited buyers (demand)

Similarly, there will be occasions when there is more demand than supply, thus it is a more competative market and the price is likely to rise as the buyers (demand) compete for the limited supply (sellers)

I think there will be very few occasions where supply does equal demand, especially in the housing market.

IveSeenTheLight

Generali wrote: »

...at 2009 levels of transactions. The level of transactions is way below what would be considered normal so presumably there are a lot of frustrated buyers and sellers out there.

What is considered normal levels of transactions?

Consider that we hear that there has been an increase in transactions in recent years as a result of BTL.

Wonder if I can look back a long term trend of transactions

zappahey

IveSeenTheLight wrote: »

I do not agree with your second paragraph Generali.
Supply does not have to equal demand in a free market.

There will be occasions when there is more supply than demand, thus it is a less competative market and the price is likely to lower while the sellers (supply) compete for the limited buyers (demand)

Similarly, there will be occasions when there is more demand than supply, thus it is a more competative market and the price is likely to rise as the buyers (demand) compete for the limited supply (sellers)

I think there will be very few occasions where supply does equal demand, especially in the housing market.

IIRC from my schoolboy economics, you have just demonstrated that supply must equal demand and the price is changing to ensure that this equilibrium is achieved.

It may be that actual equilibrium is never actually achieved but it is constantly being sought.

IveSeenTheLight

zappahey wrote: »

IIRC from my schoolboy economics, you have just demonstrated that supply must equal demand and the price is changing to ensure that this equilibrium is achieved.

If that is so, why are there properties that are not selling and buyers have been pushing the average market price up this year?

HAMISH_MCTAVISH

So 2009 funding is sufficient to maintain 2009 prices.....

Generali wrote: »

...at 2009 levels of transactions.

Which are only limited by 2009 levels of funding......

It does appear that the market has decided it just does not want to, or is incapable of, reducing prices to enable higher transaction volumes at today's level of funding.

Quite possibly a rational response to the abnormally high levels of transactions seen in 2007. With so many houses bought at close to peak prices, millions of people cannot afford to reduce. And millions more simply do not wish to suffer the higher mortgage prices and far worse deals available today when banks make it so difficult to port existing mortgage products.

Saw something similar to this discussed elsewhere, as Price Entrenchment Theory.

Perhaps they had a point.

The level of transactions is way below what would be considered normal so presumably there are a lot of frustrated buyers and sellers out there.

Indeed.

Although as available funding has increased, and continues to increase, so do transaction levels, and prices.

The real question is how much more funding will be made available, how will that increase competition and LTV's, impact bank margins, and over what timescales.

HAMISH_MCTAVISH

zappahey wrote: »

IIRC from my schoolboy economics, you have just demonstrated that supply must equal demand and the price is changing to ensure that this equilibrium is achieved.

It may be that actual equilibrium is never actually achieved but it is constantly being sought.

I would agree with that.

Rising prices, as we have seen all year, indicates that demand outstrips supply.

zappahey

IveSeenTheLight wrote: »

If that is so, why are there properties that are not selling

I would guess that those individual properties are over-priced, thus suppressing demand for those in particular.

and buyers have been pushing the average market price up this year?

Again guessing, but it may be that the good stuff is limited and, therefore, being chased by many buyers.

I don't have direct recent experience from this distance but I'm watching an area in Wiltshire, that we moved from, and that's how it looks on the surface.