• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Why do you believe that the property profession has been so poor at judging major turning points in activity in property markets

Extracts from this document...

Introduction

Why do you believe that the property profession has been so poor at judging major turning points in activity in property markets? Illustrate your answer in light of recent experience in the UK over the period 1985 to 1995? Property worldwide is noted for booms and slumps, and on occasion running to full blown crises with serious wider impacts. To understand why the property profession has been so poor at judging major turning points it is important to define what is meant by the property cycle: Property cycles are recurrent but irregular fluctuations on the rate of all-property total return, which are also apparent in many other indicators of property activity, but with varying leads and lags against the all-property cycle. The difficulty of the property market is that although the returns demonstrate a steady long-term trend, in the short-run the market is subject to cycles and can therefore be extremely volatile and damaging. The period between 1985 and 1995 is often cited as the best example of the boom/bust economy, during the Conservative government's supply side reform era, where the volatility of the property market was particularly evident. ...read more.

Middle

Data validity can be very problematic as depending on the sources and time line. This is heightened in the property market where pre-1980 property history (a major step to 1981 when IPD figures were based on 133 portfolios as opposed to 6 in1971) data was subject to uncertainties and errors arising from differences in coverage and in methods. Nevertheless, there has definitely been a conscious move by researchers- aided by globalisation and increased communication links and information through the internet- and today there are ample available and accurate sources used in economic models, such as the Economics Trend Annual Supplement. Up to date figures are essential as the markets are in a state of perpetual change. The lack of this data and failure of individual firms from pooling their research together may have been a key reason why they gave terrible advice to customers, yet it is best discuss the failure of the property profession in more detail later. Unpredictable shocks and mismanaged government policies exacerbated problems for forecasters in property market. During the 80s government policy helped to fuel the boom in property, with incentives to become homeowners like MIRAS-mortgage income relief at source). ...read more.

Conclusion

These lags are make turning points difficult to pin point as they are prone to variations. The failure of the property profession in relation to all the other factors does seem to be a major reason why it has failed to forecast turning points. Despite the wealth of statistics and evidence, the lack of clear economic understanding and theory in the industry makes interpreting data difficult pointless. The lack of economic theory means models become useless too, and surveyors have been accused many times of just advising clients based just on 'gut instinct.' This intuition, although useful as it may be based on many years of experience in the industry, is far too unsubstantial to predict turning points in the market. Surveyors focused too much on the present, and are blissfully unaware of the wider structural changes occurring in society as a whole which are changing both the demand and supply of property. Maybe they do not have the resources or time to conduct detailed research within the market. The biggest problem during the period was the fact that property and economic information became a marketable commodity, thus each individual firm was suffering from asymmetric information. They did not see the benefit of pooling their information together, with no individual firm knowing enough about what is going on. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. The Quest for Optimal Asset Allocation Strategies in Integrating Europe.

    I believe that these subperiods are representative for a particular era in the process of the integration of the European Monetary Union. Consequently, the statistics on the returns, variances and covariances of the local country indices during these periods should reveal important changes over time.

  2. Macroeconomic Objectives and their impact on Business Activity

    When the price of oil increases, the ticket fares would also go up. This would lead to a widespread inflation throughout the economy, even though it had originated in one basic sector. If this situation occurs when there is a recession in the economy, there would be layoffs and it

  1. Bellway Plc is a holding company with subsidiaries; its main subsidiary company is Bellway ...

    This is slightly higher then Wilson Bowden meaning that Bellway have trouble paying its liabilities, especially when sales are low and cash is scarce such as in 2001 when cash-in-hand was significantly lower then in pervious years. Debt-to-equity ratio has increased from 16.37% in 2000 to 25.92%, which indicates that Bellway has increased in debt finance.

  2. Discuss the extent to which the economic theories in the Market's Reader can be ...

    For example, in 1950, 60% of the workforce worked in unskilled jobs. In 2000, only 15% of the workforce is employed in unskilled jobs. The percentage of technical jobs has remained steady at around 20%. The unskilled jobs have gone away in favor of skilled jobs .

  1. Discuss the extent to which the economic theories in the Market's Reader can be ...

    The combination of speed and knowledge results in efficient narrowcasting through integrated communication (3) and a more direct link with the consumer, which enhances business-consumer relationships. 4-globalization Communication networks are not only restricted to regional connection; it also includes global connections.

  2. Option Pricing Models

    The standard Black-Scholes (BS) formula prices a European option on an asset that follows geometric Brownian motion. The asset's uncertainty is the only risk factor in the model. A more general approach developed by Black Merton-Scholes leads to a partial differential equation.

  1. Environmental Analysis Of Landis Lund.

    get funding for IT courses and accounts staff don't get trained on the fork lift truck). 1.3.3 Stakeholder analysis of Overseas Sales agents Agents play a pivotal role in the customer relations process. They are mainly used in countries where English is not the primary language.

  2. Retailing In India - A Government Policy Perspective

    fifth of the global players' selling area (3,000-4,000 sq ft versus 20,000-25,000 sq ft). Department stores: These large stores primarily retail non-food items such as apparel, footwear and household products. They stock multiple brands across product categories, though some of them focus on their own store label (e.g., Marks & Spencer's St.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work