| Topic: | Re:Re:Re:Re:Property Market Stable But Confidence Is Shaky??! | |
| Posted by: | Ken Munn | |
| Date/Time: | 13/06/08 10:58:00 |
| Not an estate agent, far from it, although I had one for a client in the past. In any market you have to look at fundamentals, which are supply, demand and price. Price is the regulator which matches supply and demand. Too much supply, not enough demand and the price falls, and vice versa. We have an underlying market where demand exceeds supply for the demographic factors mentioned. Rising price is the natural consequence. Prices may have risen too far, too fast, supported by easy credit, economic growth and increasing incomes, but that's only a question of degree and any correction now will be accompanied by a transactional slowdown while potential vendors wait for buyers' resources and 'credit-ability' to catch up. At the moment, demand is artificially constrained because of lack of available credit. When credit is restored, prices will rise unless supply increases and there are no signs, despite government intentions, that it will. In the meantime we have an artificial market, where there is both a lack of supply (property is not being put on the market), and a lack of demand (credit is not available). In such a market prices will move downwards, but only for those who HAVE to sell. The fact that they have fallen so little is a measure of how strong underlying demand is. What a property is worth is the price it will sell for at the time it is sold. A property for sale does not have a price, only a value, but that value means nothing if it is not for sale. The underlying market fundamentals (demand exceeds supply) mean that prices will rise. Long-term you can't buck market fundamentals - ask the ex-communist states. And long term, at current transactions rates (one sale per homeowner every 18 years on average) means taking a distant view. |