Consumers house price expectations
In late 2008, nearly 50% of adults were expecting house prices to fall, a record high. This situation has reversed by November 2009 to a near record net balance between expectations of a rise and expectations of a fall.
House prices are primarily driven by shifts in the balance between demand and supply. However, if consumers are confident about further rises in house prices they may expect to pay more when buying and demand more when selling. Thus, expectations could be an influence on actual prices.
There is a strong correlation between the net balance (% expect prices to rise minus % expect prices to fall) as shown in the second chart. Our indicator is a regression model based on the net balance.
Charlie Nelson, Director Foreseechange, March 2010
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