House prices will FALL by up to 10% in 2010, top economists warn

Emy1501

HAMISH_MCTAVISH wrote: »

Because price is driven by supply and demand, without exception.

No matter how bad the economy, if there was only one house for sale in Britain, and one million people wanting to buy it, the price would rise until only the richest of those million could afford to do so.

Surveyors are the lead indicator of supply. They know, before the rest of us, how many houses are being valued for sale and therefore what is happening to supply levels.

So that would be one way a surveyor would be better at predicting house prices than the rest of us..... :rolleyes:

So what happened in 2008 and why was their prediction so wrong and in 2009:rolleyes:. You suppy and demand argument just does not stand up.

If the economy turns bad Hamish there will be 100,000's of forced sellers. The country will be downgraded and the government will not be able to prop up the market like it is doing at the moment with SMI's etc.

Graham_Devon

HAMISH_MCTAVISH wrote: »

Because price is driven by supply and demand, without exception.

I thought house prices fell because of lack of credit?

That's what you told us?

Now, it's supply and demand without exception?

nembot

Hamish, nobody predicted the BOE and Goverment would try their hardest to stop the biggest crash ever, exactly in the same way people like you failed to predict they would...

Yet you constantly use the "supply and demand" argument, citing this is the reason prices didn't fall through the floor.

Let me tell you, supply and demand has nothing to do with what is happening now and it you think it does, you're a (insert preferred profanity) idiot.

chucky

Graham_Devon wrote: »

I thought house prices fell because of lack of credit?

That's what you told us?

Now, it's supply and demand without exception?

Hamish isn't totally correct but he's much closer than you on this because demand equalling supply is equilibrium in economics...

if demand is greater than supply, prices will rise, if demand is decreased or increased supply - prices fall . until demand and supply are equal again we have an equilibrium price. if markets worked like this there would not be a need for credit rationing or the BOE rate increasing or decreasing amongst other options available.

credit is a factor that influences both demand and supply - we've explained this a few times to you now Graham. :rolleyes:

chucky

Emy1501 wrote: »

So what happened in 2008 and why was their prediction so wrong and in 2009:rolleyes:. You suppy and demand argument just does not stand up.

Devon nailed this one for you...

Graham_Devon wrote: »

I thought house prices fell because of lack of credit?

Graham_Devon

nembot wrote: »

Hamish, nobody predicted the BOE and Goverment would try their hardest to stop the biggest crash ever, exactly in the same way people like you failed to predict they would...

Yet you constantly use the "supply and demand" argument, citing this is the reason prices didn't fall through the floor.

Let me tell you, supply and demand has nothing to do with what is happening now and it you think it does, you're a (insert preferred profanity) idiot.

The supply and demand argument is flawed from the outset.

Why? People will tell you stimulus should not be and will not be pulled instantly. They will tell you interest rates will not go up for years because right now, the economy and house prices are too fragile.

Yet when you present them with the argument that house prices have been artificially pulled upwards, they deny this and say it's all supply and demand.

So they don't want to see the stimulus pulled too quick as that's too dangerous. Banks caused the fall in prices as they stopped the lending. But supply and demand rules everything and thats why prices will continue upwards.

It's called sticking fingers in your ears and going lalala when you don't want to hear something, but using that very same thing to back up your arguments elsewhere.

Emy1501

chucky wrote: »

Devon nailed this one for you...

But we only really saw a lack of credit in late 2008 when the banks were bailed out. We saw prices fall because people who were not credit worthy could not get loan.

Therefore Hamish's argument that house prices has nothing to do with the economy and its all about supply and demand is a nonsense. Its all about supply and demand if the economy is in a good state or if as we have now its being underpinned by the government with the belief that things will improve in the future.

chucky

Emy1501 wrote: »

But we only really saw a lack of credit in late 2008 when the banks were bailed out. We saw prices fall because people who were not credit worthy could not get loan.

i don't 100% agree with Hamish's supply vs demand theory as he puts it.

i see the supply vs demand theory through the factors that drive it - most recently the lack of credit, low interest rates all had an effect on demand and supply.

Emy1501 wrote: »

Therefore Hamish's argument that house prices has nothing to do with the economy and its all about supply and demand is a nonsense. Its all about supply and demand if the economy is in a good state or if as we have now its being underpinned by the government with the belief that things will improve in the future.

he's sort of right - have a look at the factors for a temporary disequilibrium of markets and it will give you your answer - so will aggregate demand and effective demand in relation to an asset class (property).

Generali

chucky wrote: »

i don't 100% agree with Hamish's supply vs demand theory as he puts it.

i see the supply vs demand theory through the factors that drive it - most recently the lack of credit, low interest rates all had an effect on demand and supply.


he's sort of right - have a look at the factors for a temporary disequilibrium of markets and it will give you your answer

In a free market, all that can drive prices are supply and demand as there isn't anything else.

Now what drives supply and demand? That's where the debate becomes interesting.

Emy1501

chucky wrote: »

i don't 100% agree with Hamish's supply vs demand theory as he puts it.

i see the supply vs demand theory through the factors that drive it - most recently the lack of credit, low interest rates all had an effect on demand and supply.


he's sort of right - have a look at the factors for a temporary disequilibrium of markets and it will give you your answer - so will aggregate demand and effective demand in relation to an asset class (property).

Sorry anyone who thinks that if the economy tanks next years house prices will not go with it are mad in my opinion. Of course its highly likely that over a long period they will pick up again but in the short term they will tank.

If we get downgraded or their is a serious threat and QE is not working the last thing the government will be thinking about is keeping houseprices stable.

Given the choice of protecting education/health or keeping houseprices high I suspect the government will let prices go.

Now of course if the economy does not tank and does as well as the government suggests then the supply and demand argument stands up.