I am getting a bit tired of hearing news reports that say “the housing market is recovering” or “housing market does XYZ”. There is a market and the emergent behaviour is the result of the behaviour of each participant (buyers, sellers, lenders and all the other professionals). I understand that commentators are excited by information telling them that things are changing and there is something new to report. However, what I see happening in the housing market here in Edinburgh does not match these reports. This is because I’m looking at the underlying behaviour while they are looking at one metric which hides all the detail.
Here in Edinburgh I have friends who are bidding on properties that are selling in as little as a fortnight. These are properties such as colonies or family sized homes in the city – the key point being there is a limited number of these and the buyers have the means to bid higher.
Then at the other end there are properties which are on the market for months and months, and where the sellers are periodically dropping the price or taking the property off the market. These are first time buyer homes such as one bedroom tenement flats and these buyers haven’t had a real-terms pay rise for years.
How do you describe the market in Edinburgh? Recovering? Bubble? Stagnated? Healthy? It’s all of these things, but in small specific sectors.
What does it matter? Well, I think it matters because the market participants listen to the media reports and their behaviour is affected by what they hear. This then changes the emergent behaviour of the whole market. The market is deeply affected by what people think and say about it. I love the complexity of markets, it’s so interesting, and that’s why I’m frustrated when the news reports simplify things so much.