How is a month's supply calculated?

johnnyskeleton

The irishpropertywatch website states that there the stock of unsold property is currently at 16 months supply.

Does anyone know what a month's supply of property is?

Same As

Basically the months supply of houses is the ratio of the number of houses available for sale and the number of sales completed.

Its used to determine how long the number of houses for sale would last if sales remained at specific rate at any point in time...

johnnyskeleton

Same As wrote: »

Basically the months supply of houses is the ratio of the number of houses available for sale and the number of sales completed.

Its used to determine how long the number of houses for sale would last if sales remained at specific rate at any point in time...

Thanks for that.

So on the basis that there are 60k properties for sale, and there is 16 months supply overhang, does that mean that even at the moment there is a monthly average of about 3800 properties being sold? This seems quite high - I would have thought that there would have been less than 1k properties being sold at the moment.

Same As

johnnyskeleton wrote: »

Thanks for that.

So on the basis that there are 60k properties for sale, and there is 16 months supply overhang, does that mean that even at the moment there is a monthly average of about 3800 properties being sold? This seems quite high - I would have thought that there would have been less than 1k properties being sold at the moment.

Take for example:

If there were 20,000 properties for sale and 2,000 were sold in a particular month:
20,000/2,000 = 10 months Supply. This tells us is how many months the properties for sale would last if the sales figure remained constant.

The Fact that its 16 months supply at the moment tells its own story. The market average is around 5 months,if the Months supply is below this then we have more buyers in the market,if the figure is above the average( which it is now) the more Sellers are in the market. The higher the months supply,the more favourable the market is to buyers.

astrofool

Same As wrote: »

The Fact that its 16 months supply at the moment tells its own story. The market average is around 5 months,if the Months supply is below this e.g. 3 months then we have more buyers in the market,if the figure is above the average( which it is now) the more sellers are in the market. The higher the months supply,the more favourable the market is to buyers.

I think you meant the corrected quote above.
More buyers = more demand = less months supply.
More sellers = less demand(more choice for buyers) = more months supply.

Same As

astrofool wrote: »

I think you meant the corrected quote above.
More buyers = more demand = less months supply.
More sellers = less demand(more choice for buyers) = more months supply.

It was late last night!:D;)

TY Mod,Ammendment in process!

beeno67

johnnyskeleton wrote: »

Thanks for that.

So on the basis that there are 60k properties for sale, and there is 16 months supply overhang, does that mean that even at the moment there is a monthly average of about 3800 properties being sold? This seems quite high - I would have thought that there would have been less than 1k properties being sold at the moment.

There was a link on to Irish Banking Federation in "Housing bubble bursting" a while back. Here it is again. http://www.ibf.ie/pdfs/ibf_pwc_mortgage_Q108.pdf

On the chart on page 2 it shows number of mortgages in first quarter of this year at 28508. Take away top-up and remortgages and it leaves you a total of 13,000 mortgages which presumably means at least 13,000 houses were purchased in first 3 months of this year or a little over 4,000 per month. Well down on previous years but not the levels most people on this site think.

johnnyskeleton

Same As wrote: »

Take for example:

If there were 20,000 properties for sale and 2,000 were sold in a particular month:
20,000/2,000 = 10 months Supply. This tells us is how many months the properties for sale would last if the sales figure remained constant.

The Fact that its 16 months supply at the moment tells its own story. The market average is around 5 months,if the Months supply is below this then we have more buyers in the market,if the figure is above the average( which it is now) the more Sellers are in the market. The higher the months supply,the more favourable the market is to buyers.

Thanks for that. I'm sorry to keep harping on about this, but the thing that puzzles me is this:

Lets say that supply is increasing by 10k houses per month, and house sales are decreasing. As every 10k houses comes on board the supply increases, thus the supply of houses increases to 16 months. But the sales are falling at the same time so the calculation of a month's supply increases too, thus increasing the supply further.

It just seems to me that supply of houses could be a very erratic figure, and during the summer months when there are very few sales it should shoot up while during peak selling season it should be artificially low.

It also seems to be something that has appeared in the last IPW report and there is no basis for comparison.

johnnyskeleton

beeno67 wrote: »

There was a link on to Irish Banking Federation in "Housing bubble bursting" a while back. Here it is again. http://www.ibf.ie/pdfs/ibf_pwc_mortgage_Q108.pdf

On the chart on page 2 it shows number of mortgages in first quarter of this year at 28508. Take away top-up and remortgages and it leaves you a total of 13,000 mortgages which presumably means at least 13,000 houses were purchased in first 3 months of this year or a little over 4,000 per month. Well down on previous years but not the levels most people on this site think.

Thanks for that, but if you take away mover uppers it's more like 3k per month.

So if you take an estimate of 300k properties for sale (70k on daft + new developments + locally advertised etc), could you say that a more realistic figure is 100 month's supply?

beeno67

johnnyskeleton wrote: »

Thanks for that, but if you take away mover uppers it's more like 3k per month.

So if you take an estimate of 300k properties for sale (70k on daft + new developments + locally advertised etc), could you say that a more realistic figure is 100 month's supply?

Why would you exclude mover uppers? That makes no sense.
Also the estimate of 300,000 properties for sale means you believe that one in 6 houses in this country is for sale today. That makes no sense either.

johnnyskeleton

beeno67 wrote: »

Why would you exclude mover uppers? That makes no sense.
Also the estimate of 300,000 properties for sale means you believe that one in 6 houses in this country is for sale today. That makes no sense either.

I would exclude mover uppers because although they buy a new house, they also usually sell their old ones. So while there are 2 new mortgages the stock of properties is only reduced by 1. Or put another way, if there were no ftbs or investors, just people who traded up and sold their old houses, there would be lots of sales but no actual decrease in the housing stock.

beeno67

johnnyskeleton wrote: »

I would exclude mover uppers because although they buy a new house, they also usually sell their old ones. So while there are 2 new mortgages the stock of properties is only reduced by 1. Or put another way, if there were no ftbs or investors, just people who traded up and sold their old houses, there would be lots of sales but no actual decrease in the housing stock.

But for deciding the months supply you must count all buyers even mover uppers as you must count all properties for sale, even if they are been sold by mover uppers.
Using your logic you shouldn't count properties for sale by mover uppers as they are selling one house and buying another so having no effect on housing stock.

astrofool

Also, the supply figures will take into account yearly dips and rises in levels of activity.

i.e. if no properties sell on Monday, that doesn't mean that there is an infinite supply (or a divide by 0 error )