House price cuts helped sales surge by nearly 10pc last month

joguest

wotsthat wrote: »

I didn't say supply wasn't elastic - I said it's not highly elastic.

To take 2008 and to try and build a theory about sales volumes and prices would require some special analysis. Wasn't there a multitude of other things happening that might have impacted?

It would be like trying to explain why sales of houses 'surged' due to a small and gradual increase over the previous 12 months without taking account of other factors such as better mortgage deals or people just being sick of waiting. Maybe FTB's who were unable to get a mortgage due to deposit requirements have finished saving and are entering the market.

I said predominantly elastic - i.e. more elastic than not. It doesn't require much of an analysis for 2008 imho - as prices dropped, less and less people were willing (and able) to sell (i.e. supply was predominantly elastic, given sales dropped faster than prices).

Mallotum_X

Whilst the straight forward view is that all houses on the market are part of the supply, one does need to consider whather they really are part of the active market.

For example, keeping it simple, 10 identical houses in a road come up for sale. Nine are marketed at 150k and the 10th is put up for sale at 300k.

If the houses at 150k are selling, then that would suggest the market price is 150k. The 300k one isnt going to sell, and so isnt really part of the market.

Whilst it is "for sale" and so we would say its part of the supply, it isnt really as only the ones at about the 150k are participating in the market.

This one would be at a position further down the supply curve, a point at which the seller would be happy to sell. There would probably be other people in that road that would sell if the price was being pushed up at 300k, but as they would only add to supply at 300k they too are not part of the market or part of current supply. The current supply therefore is 9, not 10.

The 300k house therefore it could be demonstrated is not part of supply at the moment, regardless of the fact it has a for sale board up. If demand increases - or the demand curve shifts (lets say easier mortgage terms/wage rises) then it may be that houses would sell at 300k, and all 10 houses would then be part of the supply at that point in time.

Supply from this point of view has little to do with stock, the two things are seperate concepts. Ultimately stock of houses is every house in the country, everyone has a price even if its not on the market.

HAMISH_MCTAVISH

Transactions rising = prices rising.

Transactions falling = prices falling.



It does rather seem that rising transactions lead rising prices for the UK housing market.

So I'm fairly surprised anyone is trying to argue otherwise, or celebrating this months big jump in transactions of you want lower prices.

SteveV2

joguest wrote: »

"I meant in the article, Sales had increased 10% you could say demand was up based on that."

But if sales increase and prices go down then it implies that the market is dominated by an increase in supply.

I do love these debates but that just don't make sense to me. I'm not the full ticket mind

Sales increase (sold signs), prices go down (- monthly figures) and this increases supply (more houses built?)

Surely those first 2 things would increase demand and not supply??

The only way to increase supply in the housing market is to build more houses.

Graham_Devon

HAMISH_MCTAVISH wrote: »

Transactions rising = prices rising.

Transactions falling = prices falling.



It does rather seem that rising transactions lead rising prices for the UK housing market.

So I'm fairly surprised anyone is trying to argue otherwise, or celebrating this months big jump in transactions of you want lower prices.

It doesn't seem that way at all.

I give you the land reg data for England and Wales since Sep 1995.



The only time you can make a proper correlation is in 2008, when sales volume fell of a cliff, as did prices.

But that was more to do with a credit crunch leading to the drying up of mortgage approvals.

You could argue there is some correlation up until 2002, with rising sales volumes. But then sales volumes drop off and prices continue rising in the same fashion as they had been. In 2004, we see a drop from 130,000 sales to 60,000 sales a year, but prices rise still.

You are talking nonsense again and looking ONLY at very VERY recent data....which you call noise at other times. Of course this "noise" now suits you and your argument, so you'll use it.

HAMISH_MCTAVISH

Graham_Devon wrote: »

You are talking nonsense again and looking ONLY at very VERY recent data....which you call noise at other times. Of course this "noise" now suits you and your argument, so you'll use it.

When have I ever called several years worth of data "noise"?

Link?

Graham_Devon

HAMISH_MCTAVISH wrote: »

When have I ever called several years worth of data "noise"?

Link?

A detraction? How original!

Heres what I said...

You are talking nonsense again and looking ONLY at very VERY recent data....which you call noise at other times. Of course this "noise" now suits you and your argument, so you'll use it.

If you are not looking at only recent data, can you explain how your theory works when looking at the graph I posted? It doesn't.

Your theory however does work rather nicely if you take 2007 onwards (because of the credit crunch). I tried it on the land reg. However, it's total nonsense if you go a bit further back.

Here is your theory working...



But as I said, the reason for all of that on the graph is a credit crunch and then rising lending / confidence again. Hence you are only looking at very recent data and ignoring a credit crunch to make your nonsense theory work. It's what you do constantly. You'd be a great masseur considering all the practice you have had on statistics.

Jimmy_31

HAMISH_MCTAVISH wrote: »

And just 0.6% lower on the Nationwide index.

But I somehow doubt that a 0.6% to 2.3% fall on average has resulted in a near 10% increase in transactions.

And if it has, the bears should be very worried indeed. As based on those results, a further fall of just 6% or so would get transactions back to all time peak levels.

yeah your right hamish, im proper shi77ing myself now:rotfl:

joguest

SteveV2 wrote: »

I do love these debates but that just don't make sense to me. I'm not the full ticket mind

Sales increase (sold signs), prices go down (- monthly figures) and this increases supply (more houses built?)

Surely those first 2 things would increase demand and not supply??

The only way to increase supply in the housing market is to build more houses.

If more people are prepared to sell (at a certain price) than the number of people prepared to sell at the same price last month (or over whatever time period) then supply has increased in the last month.

There are plenty of methods to increase supply in the housing market without building houses - e.g. increase council tax on second/empty houses, introduce a land value tax, increase capital gains tax, introduce a buy-to-let tax.

Land value taxers tend to view the total housing stock as the 'supply' and hence it is almost completely inelastic, with all movements in price being determined by demand. Effectively, such a method isn't sticking to the principles of demand/supply graphs which show demand and supply as an instant snapshot of the market, with the demand and supply curves being re-drawn at the next snapshot, etc. However, with such a plot (based on total housing stock), the fiscal factors I've just mentioned effectively decrease demand (and obviously have no effect on the total housing stock) rather than increasing supply as with the conventional plots.

Graham_Devon

See Hamish is gone!