Hometrack: Supply falling off a cliff....

julieq

Graham, supply is a pipeline. It's really not difficult to understand.

How long does the sale of a house take to conclude? Let's say three months.

Therefore there is a three month delay between putting a house on the market before it feeds through to the sales figures. This is known as pipelining. If you increase supply today, the effect is only measurable when that supply has fed through the pipeline to actual purchases. The only immediate effect an evident supply increase can have today is to induce buyers to drop their offers on purchases which won't complete for some time yet. Effect lags cause. Pipelining.

It's not an abstract concept to spin figures one way or another. It's how things work when there is a time delay between cause and effect, and it's an entirely conventional way of modelling that, not something I've invented.

And the proof? If you go back about three months you'll probably see people explaining here how now supply is increasing prices should start falling. Well prices did fall as a result of increasing supply, but the supply increased in the summer and prices fell in the winter.

I think you're getting muddled by not understanding the difference between pipeworks and analogies. The point is that a "demand" tap would operate immediately. Turn the tap, demand increases instantly, prices go up. Close the tap, prices go down instantly. In the pipelining analogy the tap is at the other end of a long pipeline. You don't see the effects for some time. I have this horrible feeling this discussion is about to descend into a ding dong about actual plumbing, but the pipeline analogy is perfectly adequate to understand why you do not get immediate effects from changes in supply.

Incidentally I'm not responsible for what Hamish says or thinks either. And the first put down wasn't mine, it was someone else calling other people thick, and missing the point entirely.

IronWolf

julieq wrote: »

Graham, supply is a pipeline. It's really not difficult to understand.

How long does the sale of a house take to conclude? Let's say three months.

Therefore there is a three month delay between putting a house on the market before it feeds through to the sales figures. This is known as pipelining. If you increase supply today, the effect is only measurable when that supply has fed through the pipeline to actual purchases. The only immediate effect an evident supply increase can have today is to induce buyers to drop their offers on purchases which won't complete for some time yet. Effect lags cause. Pipelining.

It's not an abstract concept to spin figures one way or another. It's how things work when there is a time delay between cause and effect, and it's an entirely conventional way of modelling that, not something I've invented.

And the proof? If you go back about three months you'll probably see people explaining here how now supply is increasing prices should start falling. Well prices did fall as a result of increasing supply, but the supply increased in the summer and prices fell in the winter.

I think you're getting muddled by not understanding the difference between pipeworks and analogies. The point is that a "demand" tap would operate immediately. Turn the tap, demand increases instantly, prices go up. Close the tap, prices go down instantly. In the pipelining analogy the tap is at the other end of a long pipeline. You don't see the effects for some time. I have this horrible feeling this discussion is about to descend into a ding dong about actual plumbing, but the pipeline analogy is perfectly adequate to understand why you do not get immediate effects from changes in supply.

Incidentally I'm not responsible for what Hamish says or thinks either. And the first put down wasn't mine, it was someone else calling other people thick, and missing the point entirely.

You are wrong.

This is a survey, it is not actual sell prices, therefore, these are the price decreases for January assuming an average marketing period and taking into account the current market conditions, as reported by the estate agents, there is no "pipeline" delay for these figures.

I too love it when people tell other people they're being a bit thick, then miss the point spectacularly themselves.

pwnage

harrup

Supply falling off a cliff?

Not in my area for sure.

I've lived in this area ( Devon) for 25 years and NEVER before have there been so many properties been put on the market in January.

Usually people toying with the idea of selling wait until Spring as their garden looks prettier and the house and indeed the whole area look their best.

But not this year. A veritable flurry of new ( as in "new to the market") properties. It's hard not to speculate that the vendors are thinking "let's get the most we can whilst we still can".

My inbox is brimming with alerts from rightmove & primelocation....and my search radius and criteria are pretty narrow.

It's not just my personal perception either. My neighbour's daughter works for a large EA with numerous offices. According to her, this January they have had an unprecedented demand for pricings from prospective vendors. Some were from property developers trying to offload their falling assets. The vast majority, however, came from ordinary home owners wanting to downsize and wanting to do so before the value of their property decreased further.

Moreover, I personally know 3 people whose house has been on the market for a year or so. They are the kind of " if I sell my house for the desired ££££ 'll sell it, if not I'm not bothered" type of people. 2 of them slashed their prices by 20 + K in January.

Thus, there is absolutely no shortage of supply down here. What there is, in contrast, is a bunch of highly cagey buyers reluctant to purchase something which may well be worth a lot less in a year down the line than it is now. Which it may very well be. Hence demand is lukewarm, supply is hot.