If you don’t like capitalist gloating, skip this post.

House prices still rising. I’ll do some graphs on this some time.  Hell, here’s one: it was part of a dialogue with a friend a year ago, where I was arguing in favour of buying massively the Spreadfair Housing Futures, because surely house prices could not fall as far as the market was predicting without some radical monetary action:

houseprices jun08I was right.  Maybe a bit lucky, but right.  The market stabilized this year.  I was long loads of Dec09 and Dec10 houses at a price of 130-140, which now looks like settling at 162-170 – my best bet ever.  Sorry, but it doesn’t happen often.  I think the high level of house prices in this country is a real problem, but my small bets do nothing to exacerbate them.  And what were those people thinking, selling at a 20% discount? Jeez.

Housing wealth in unequally distributed in this country.  The effects of QE and a lack of supply has boosted the wealth of the top half/top third.  Here is my estimate:

700bn

This ought to be spelled out more.  Has QE rescued the economy?  It has certainly rescued the wealth of a segment of our society.

Advertisements

3 thoughts on “House Price Gloat

  1. heh – nice work, predicting the market can be tricky but you’ve done it well here it seems.

    “This ought to be spelled out more. Has QE rescued the economy? It has certainly rescued the wealth of a segment of our society.”

    Spot on – those towards the top who already had assets have had their value boosted (temporarily, the withdrawal of the QE steroids could still see a reduction, no…?), whilst those excluded from the house-buying bonanza (4 million on social housing list etc…) struggle – yet more evidence that QE and other monetary tinkering will not, cannot tackle the unequal nature of the underlying economy… IMHO…!

  2. I keep a close eye on Allsop’s auctions. Have a look at their report on their October Auction here:
    http://www.allsop.co.uk/articledetail2.aspx?nid=406
    There was some serious bidding well over the guide prices especially for high value stuff.
    Cash is still king.
    How does QE get into cash?
    Was it through sales of assets that QE had inflated? Though wouldn’t that suppress the prices of those assets and there seems no sign of that.
    Could it be through bonuses but have these actually been handed out yet?
    Are these purchasers canny investors who got out of property late 07 early 08 and are now using that cash?
    Is it black economy stuff?
    Is it foreign money – all these predominantly London World City properties now look cheap to Euro holders, I imagine.
    Is it supply that is restricted? Number of transactions?
    These are not first time buyers who still find it impossible to raise the 30% deposits even though they have the income to make the monthly payments.
    Paying to get a 8% return on assured shortholds is still the thinking of someone who expects rises in capital values.

  3. I think the foreign exchange aspect is critical; London homes to a foreign buyer are p’raps 40pc cheaper in places, & more if you are thinking nominal loan srvicing costs.

    Housing markets are different from stocks; thet freeze rather than plummet on heavy volume. The nominal bill hitting the floormat, interacting with unemplyment is what forces people into distress sales -both variables much better than 1992. This was why i was willing to pick the turn.

    But QE must have had a weird effect; asset purchases by funds? who knows. but definitely not reaching the poor & credit-constrained.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s