The Politics of Housing

The Politics of Housing is necessarily societal, in other words you can’t divorce housing from politics.

When canvassing for the Brexit vote in 2019 and accepting becoming our Prime Minister in July 2019, Mr Johnson promised that his government would be a government inclusive for all in society, having won the popular vote on that basis.

It is clear from the Prime Minister’s closing speech at the Conservative Party Conference on the 6th October 2021 that the main political parties in Britain vehemently disagree with one another to the point of being hateful of each other. How depressingly sad! Many people consider it is politically unwise to reciprocate hate and derision to those already engaging in it, in order to score pints or to denigrate the chosen opponent.

It is also insufficient to ignore those who may disagree with one’s own declared point of view. All opponents deserve a proper explanation of your thinking, even if they may continue to disagree. Proper debate is a necessary formality in any democracy. If democracy is still to be hailed as being king, then listening to the points of view held by ‘other’ and debating them is essential. That should naturally include debating with the electorate.

Whatever political view an individual may wish to take, it would seem to me that there are three institutions that should be held as being at the very pinnacle of present day society. These are The Judiciary, The NHS and The Town and Country Planning Acts and laws.

To demolish or significantly downgrade any of the principles held in these well established disciplines would be tantamount to dismantling democracy as we know it. Whenever setting out to make new policy for the benefit of a whole country such as Britain, these three disciplines should always be fully taken into account and given careful consideration.

Tough love, directed towards some parts of society, may be necessary for further improvement but it would, by its own definition, have to be based on love and nurture, not prejudice.

The noblest of decisions, taken in order to improve the lot of the many in modern society must occasionally fail in practice.

If this happens I would suggest the lessons set out in Max Ehrmann’s Desiderata could help and these should be applied. Using these philosophies more wisdom, knowledge and learning can replace one’s own present misunderstandings, relatively swiftly and blamelessly. It advises, as far as possible, without surrender, be on good terms with all persons.

To me this means those who are not learning from life or improving their own way of thinking in the process, are wasting their present lifetime whilst destroying theirs and others’ future prospects. Taking such a stance should not be seen as being a weakness. It is a strength which can make our nation greater than it has ever been.

Based on this, certain core policies are needed to steer us in the direction of forward progress.

What follows is a set of proposals to seal the cracks inside our community before these widen or establish themselves structurally. The resultant damage that would be done if this was to be allowed to happen would be incalculable.

FOR EXAMPLE: Before designing a new Town & Country Planning system for the whole of Britain, it would be a good idea to get a clear picture of what would make each local community thrive, and then incorporate precisely that.

To date we have seen little evidence of that and practically no justification for the arbitrary zoning designations which are being proposed in the Planning White Paper currently being debated in Parliament. This deserves much further consideration.

The clear and over-riding objective surely must be for ordinary working people to be able to find openings for good new jobs.

My contention, (even though it was not spelled out in Prime Minister Johnson’s speech at the recent Conference), is the forward plan must in fact be to debate and arrange with business leaders to start searching for and employing more-skilled people, including training them up and paying them substantially more whilst expecting more productivity/profitability from them in return.

The resultant gain to industry could be achieved from increasing the incentive amongst school leavers and university graduates alike to decide on a higher-skilled career for themselves, earlier, and then to train more intensively for that.

Those youngsters who do not choose to follow this path would be likely to have to accept whatever unskilled jobs there may be at low wages (and with little or no prospects), of course.

This is, in effect, increasing the requirement on job seekers to decide what they would like to do earlier and to embark on getting the best training and qualifications they need for their choices of career.

Other successful economies have already achieved such outcomes and because this has been done elsewhere it could certainly be done in Britain if the incentives were provided.

One organisation, KPMG (the accountancy conglomerate) is already in the news for helping in the battle for greater diversity among types of job especially within the poorer communities by offering apprenticeships. It wants nearly a third of their staff to be coming from working class backgrounds by 2030. Enabling diversity of perspective, fresh thinking, and wide-ranging insight should help all businesses to perform.

Those from routine maintenance and service organisations may apply. Levels of pay and prospects in life really matter to employees but so does aspiration. Van drivers, butchers and factory workers should be among those applying for schemes such as these if they should wish to do so.

I wonder if anyone else is thinking these may be the insights behind Boris Johnson’s recent Conference Speech?

Equally importantly is the house price crisis and for more about how the lack of adequate housing combined with the UNaffordability problem could be fully resolved, not only swiftly but also economically, please follow the link below:

The House Price Virtuoso Solution

How to Improve Housing Markets in England and Wales.

What do you think about these ideas for drastically improving the operation of all housing markets in Britain?

Constructive comments are very much welcomed.

Posted by: Peter Hendry, Housing Valuation Consultant

Author:– The House Price Virtuoso Solution

The Nature of Communities

As Her Majesty The Queen rightly says following the twentieth anniversary of 9/11, we should pay tribute to the resilience and determination of our communities.

As far as housing is concerned the important thing for government to consider is everything is going up, whilst at the same time the less well-off aren’t keeping up on a financial level.

The less well off should not be discriminated against in this way, surely?

IF we, as a capitalist society, are going to allow housing to be distributed depending simply on price, then clearly, houses left on the market will go to the most wealthy and hardly any will go to deserving people within each separate community.

This difficulty was purposefully addressed and managed leading up to and following the end of the last war by building council-owned properties available to be rented by those within society who could not afford to buy their own homes.

Unfortunately it now seem as if the less well off are being discriminated against, by the policies materialising during the more recent and longest stretch of post-war peace.

As a nation we should be turning away from this and instead move forward as an inclusive, modern and considerate society.  After all, we depend on large numbers of these people to keep the basic fabric of our society operating.

Supplying council-owned properties for rent actually worked quite well over the past 45 or so years and allowed the less well of to live alongside wealthier people in strategically located council estates. However, it did result in the creation of a two class society which had its problems.

All that changed of course, after Margaret Thatcher headed up the government when shortly afterwards, she brought in the sale of council houses to tenants at discounted prices. This was not a new idea. The “Right to Buy” idea was under consideration in the late 1940s, but did not win Conservative endorsement at that time.

Although Margaret Thatcher was able to activate this policy, unfortunately, she did not incorporate a way of dealing with the subsequent and increasing wealth differential between those who were becoming increasingly richer and those remaining with the least possible levels of wealth through their own individual circumstances. Nothing was put in place to help such people following dismantling the core of the council housing estates and importantly, neither were the proceeds from the sale of council houses allocated to replace any such housing.

Practically all that’s left to house those remaining unable to afford the price of owning one’s own home is the private landlord-financed, rental sector offering mainly assured shorthold or six month initial letting contracts.  That and today’s housing associations as corporate landlords but these have far too few properties to accommodate the extremely high current demand.

Falling back on private landlords to supply large scale housing in this way was never going to be the answer. It has since turned out to be every bit as bad as one might have expected it to be. It is a sort of mirror of the notorious earlier period of exploitation, which took place after the 1940-45 war when a demobbed Polish born soldier Perec Rachman (born 16 August 1919 – 29 November 1962), operated as a property speculator in London during the fifties and early sixties. His initial job was in estate agency, so we probably ought to have expected problems with lack of repairs, overcrowding, and excessive rents to return as a result of those needing so much short term housing, again involving having to rely upon private investors. That is the reason why the private rented sector still needs wholesale improvement today.

As explained there had already been severe problems with the private rented sector when Mrs Thatcher first came to occupy Number 10 in May 1979 and lasting until November 1990. Not to put in place a suitable alternative to council housing whilst effectively privatising it and whilst knowing about this recent history, appears, in retrospect, to have been a poor stance to have taken at this particular moment.

Whilst, at that time, there seemed to be no realistic alternative, nowadays there are several better options which are certainly possible and which are covered in the link to The Solution below.

Everyone can see that the private rental sector is not performing to an adequate standard, so the government should urgently be looking for an appropriate alternative.  The question is not merely whether they should but which alternative should they choose?

I am saying that the front runner is to modify the way that houses in general are marketed, making this more to do with community and less to do with the purchaser’s bank balance.

A combination of planning controls together with fairer house marketing principles would allow affordability to be maintained for those who should be able to buy where they live and work. It should provide for sufficient properties not to be swallowed up by the wealthiest in society working or living elsewhere. Such a change would not be difficult to bring about in today’s world and there would be no need to build massive new municipal housing estates to house the less wealthy either.

Instead, it would simply involve setting up a new and better way of distributing housing which would be both local and community-centred rather than purely capital value orientated. If we care for our communities, this is unquestionably to way to go.

The resilience and determination of our communities is what should be nurtured in today’s world, not allowing individuals to gain ever increasing profits from the bare necessities of life for others. We should still value community, society and inclusivity just as our monarch has reminded us concerning 9/11 on the twentieth anniversary recently.  Equality should be a rite of passage not a luxury.

I have set out the details of my strategy (or solution) for achieving this on this web site. The solution combines the effective use of planning controls with a more appropriate way of deciding who buys what. It is still primarily based on price of course but in a more locally resolved yet open way. A way which incorporates how we might like our communities to develop and thrive over time.

My solution would reduce the growing and progressive takeover of the more attractive parts of Britain by the wealthy and instead allow those contributing to each local community a better chance to buy a place of their own to live where they work.

The solution would favour those needing to live in certain locations over the wealthier incomer. Those who would simply like to buy a house where they work. Second homes, at concentration, would be strongly discouraged and may even be prevented when that is required.

To read about how this very special change could be put into effect, please follow the link below to the set of pages that explain this:

The House Price Virtuoso Solution

How to Improve Housing Markets in England and Wales.

What do you think about this idea for drastically improving the operation of all housing markets in Britain?

Constructive comments are very much welcomed.

Posted by: Peter Hendry, Housing Valuation Consultant

Author:– The House Price Virtuoso Solution

The correct way to resolve the crisis in the British housing markets

The correct way to resolve the crisis in the British housing markets is being blocked by the raft of confused political thinking in Westminster.

For example it’s no good just trying to help some people, by making larger loans to them!

It’s all too easy to let bank loans cause house prices to rise and give the illusion of good times for all, when in actual fact houses are simply becoming less and less affordable by the majority. This will naturally damage the various local housing markets to varying degrees.

The government is doing itself no favours by pursuing such policies at a time when many people, especially the younger generations, hope for a reasonable prospect of achieving owner-occupation at price-levels which are affordable and to be able to find houses in sufficient quantity to satisfy the projected increasing level of demand.

There is a gauche political will not to enable this, appearing through a mist of confusion like a giant iceberg floating in the path of those wishing and needing to make something of their lives. The course most young people would prefer to steer is not to be tethered to an ever increasing financial commitment that saps away the creativity they are born with. Instead the seek to steer a course destined to bring fruit to all of our lives, right across society.

Stifling the nascent creativity of the young in this way is a totally inappropriate thing to do. 

If those in Parliament cannot see this is happening on their watch so to speak, then everyone will suffer, including the politicians entrusted with bringing us a brighter future rather than a much bleaker one.

The correct way to resolve the crisis in the British housing markets is plainly to lower the cost of housing whilst increasing its supply in an orderly and environmentally considered way.

Some of you reading this may well be of the view that reducing house prices would be practically impossible but I say this is wrong. My surveying experience tells me there are ample opportunities for less profit to be taken by several of the participants involved in the process of supplying more housing in this country, not least in land prices which are actually geared directly to house prices themselves.

For the exact way such a refreshing change might be achieved please see the methodology set out in:

The House Price Virtuoso Solution

How to Improve Housing Markets in England and Wales.

What do you think about this idea for drastically improving the operation of all housing markets in Britain?

Constructive comments are very much welcomed.

Posted by: Peter Hendry, Housing Valuation Consultant

Author:– The House Price Virtuoso Solution

Where are estate agents going wrong nowadays

Where are estate agents going wrong nowadays?

Well, first please fully understand that the vagaries of the housing market are complicated as most people will admit.

As a retired property professional I have watched how things have been going for several decades now. A clear picture is at last emerging.

The estate agency sector, since the last war, has been increasingly failing to balance demand and supply in the housing market over the decades for reasons other than the imbalances in supply and demand!

The problem is that the estate agency sector itself is mistakenly working on the basis that the demand for housing is economically highly elastic whereas supply, they would frequently tell you, is highly IN-elastic. They say, that it is this mismatch which is causing price peaks and troughs in the housing market to occur. The argument is completely wrong for the reasons I will now set out.

Firstly, the supply of houses coming onto their books is neither IN-elastic nor is it dependent upon the total number of houses actually built.

Here are the other reasons why they are mistaken:
As just explained estate agents are actually only dealing with the number of houses currently on the market – or on their books from a supply point of view. This is quite different from the total supply of all the houses currently built and in use in the whole country.

Once they ‘get this’, they can free themselves to best help those wishing to instruct them on moving house, just as they ought to be able to do the same for those hoping to buy their next house.

Secondly, and on the fluctuating level of demand for houses from buyers, the agents generally assume this is highly elastic in nature but sadly this is equally mistaken!

In fact, agents very much affect the demand from buyers very directly, (as well as affecting the supply of homes coming onto their books as mentioned above).

This is because buyer demand is greatly affected by the level of wealth of buyers wishing to buy houses at any one time.  Understanding this is very important for generating successful house completion transactions, especially because buyer demand it is not highly elastic.

Why is that? Because overstating the asking prices of houses going onto the market will put many buyers off and it also provides misleading information to sellers concerning increasing prices, which can also put many sellers off, rather ironically.

I say this because if agents were to act for buyers instead of sellers, they would see the various opportunities available in the marketplace quadruple, bringing many more house hunters onto the marketplace and on to the agents’ books.

Once agents realise that they do in fact influence the number of houses coming onto the market (i.e. their notional total supply of houses available for purchase), then business will increase because it seriously depends on the way in which they interact with buyers as well as with sellers.

At the same time they should realise that they can and should influence the number of houses sold from a buyer’s point of view, since this all depends on the levels of wealth currently being enjoyed by those in the market to buy themselves a house at any one time.

It should be stressed, acting as an agent in housing is completely different from agents selling say expensive cars and/or yachts, because house agents are dealing with capital assets not mere chattels. Capital assets require extra special skills, involving advising buyer-clients, rather than merely advising the seller after having obtained a selling contract!

Therefore and in conclusion, prudent agents should be acting for or serving buyers as their primary clients instead of sellers, in order to bring about the greatest number of sales in any specific market situation.

Prices should be dependent upon or determined by what different buyers might be willing to pay. Where estate agents almost invariably go wrong, is they confuse this with how much buyers can each individually be made to pay!

Doing the latter is a whole different ball game and it is that which actually causes markets to ripple, which then results in price peaks and troughs inflating and deflating again and again on a regular or cyclical basis throughout the various housing markets, spread across the whole of the UK.

Please notice these peaks and troughs do not always coincide with periods of greater and lesser wealth.

This emphatically confirms my argument that agents should change their mode of operation to one of acting for buyers rather than for sellers. As well as that it fully explains that the massively increasing price levels we see currently are not as a result of increasing median net wealth but are in fact to do with buyer coercion. Such coercion must be taken right out of the agency-equation if prices are to stabilise at safe and supportable market price levels.

For more about how this situation may be fully resolved, both swiftly and economically, please follow the link below entitled:

The House Price Virtuoso Solution

The House Price Virtuoso Solution

How to Improve Housing Markets in England and Wales.

Footnote:
This is not to say new houses should not be built to provide new accommodation, wherever this is strategically necessary within each local jurisdiction.

What do you think about this analysis of the present situation please?

Comments are moderated but constructive ones are always welcomed.

Posted by: Peter Hendry, Housing Valuation Consultant

Author:– The House Price Virtuoso Solution

The Cure For The Malaise Across All British Housing Markets

The cure for the malaise across all British housing markets is to use a combination of two cures, in a similar way to a doctor using two specific antibiotics to cure a bacterial infection.

The expertise required to achieve that would involve first acquiring an accurate knowledge of the causes of such infections and following this, the ability to diagnose the correct medicinal cure for the specific infection involved.

It is of course imperative to be able to understand precisely how and why a specific illness or malaise will have occurred. Only then can the correct medicinal cure be prescribed.

Peter Hendry says, “I can explain in simple terms why house prices are continuing to rise despite the increasing lack of affordability affecting ever more prospective buyers.”

In a nutshell, the housing market should find the values of houses in a quite specific way.

The true value (or the correct buy price), of any house being offered for sale should be arrived at by adding THREE separately-assessed components together:

1 The land value – which depends in part upon location.

2: The construction cost (including a profit element to the builder or developer).

3: A further amount of equity or profit produced as a result of having combined these two.

These are the things that a sensible buyer should theoretically be considering, even if only subliminally.

All too often however, anxious buyers will base their offers on a combination of how much they could possibly afford and borrow, together with knowing the asking price being quoted.

What makes this task particularly difficult to quantify is that house prices in today’s housing marketplaces are not derived in perfect market conditions at all. The reason for this is because in a perfect marketplace, the whole amount of homes on the market would be sold and the demand for them would also be fully satisfied at all times.

Instead, the present day housing markets have large overruns where, either there is too much property being offered at any one time or alternatively, there are too few properties being offered to purchasers.

Both extremes are most unsatisfactory for prospective purchasers of houses in the regional marketplaces and especially in tourist and second-home prevalent communities.

Unfortunately, current day estate agency does not assess house prices in the way described just now. Instead they peg asking prices at the level they might simply guess they could sell a house for but also they may well often include what their client (the seller) might hope to achieve when determining an asking price!

Worse, they base their asking prices on what other asking prices are, including what the other recent sales will have achieved, albeit these would have used skewed marketing comparisons themselves for the reasons just set out.

To justify what is being explained here, a year ago for example a typical estate agent had 37 properties available and 379 applicants on their register (according to statistics published by the NAEA). Today, after a spirited first half of the year and after COVID has started to reduce, a typical estate agent apparently has just 23 live listings and over 400 applicants on their register.

If knowledge such as this were to be broadcast, it would skew prices-levels downwards whilst the market is flush with houses for sale and it would skew prices-levels upwards when there were not enough houses coming onto the market – as now.

In the former case, sadly there is inherent pressure within estate agency to want to hide the true facts of an excess of properties being listed for sale compared with buyers so as not to spook the market and to keep things going as smoothly as possible, rather than face the reality of a downwards-changing market, with prices dipping.

In the latter case however, with too few properties on their books and too many buyers wanting them, broadcasting the lack of supply actually helps agents to justify trying for rising prices even against general economic trends! This has been what’s going on recently of course.

Selling agents may try to argue that it is the desperation of buyers which is forcing the prices up but that does not explain why the housing markets are operating at such low efficiency in terms of completed sales. This shows serious imperfections, resulting in their lack of stability which means these markets are in need of a completely new approach to buying and selling houses.

In my analysis and resultant diagnosis following understanding the true causes of these problems, two specific ways to deal with them emerge.

A: Firstly there should be restrictions on the right to occupy a proportion of houses in each locality as being permanent “Primary Residence” restricted. This would mean these houses would be for use only by local people, such as key workers for example.

Most people seem to agree that each locality absolutely needs housing to be affordable to those fulfilling the essential roles in their community. This should therefore be enshrined in each area’s local planning rules.

Secondly and very importantly:

B: The emphasis on all prices should be changed so that these are set by ‘buyer offers’ rather than seller price-rigging, which is of course not an open market practice in any way if this is carefully scrutinised.

This is where The House Price Virtuoso Solution (formerly described as The Hendry Solution) could come in. It allows for both of the essential changes cited above.

It would do this by re-shaping house sales methods entirely and by including the use of “Primary Residence” restrictions on certain properties.

AND

It would enable all buyers to be free to participate and establish the price levels themselves, (subject to declared “Primary Residence” restrictions, which would be locally established using the local planning rules).

To read more about how The House Price Virtuoso Solution could improve the way in which houses are bought and sold across all local housing markets in the whole country, please click the following link.

The House Price Virtuoso Solution

How to Improve Housing Markets in England and Wales.

Posted by: Peter Hendry, Housing Valuation Consultant

Author:– The House Price Virtuoso Solution

Buyers need far better representation in the British housing markets

With estate agents acting primarily for sellers and land owners, buyers get poor advice or representation all too often.
Even though they are the ones raising (and usually borrowing) the money for each transaction, they are often the last ones to be told how things are progressing, especially where chains of other sales are involved. A lot of patching up of interlinking chains is frequently going on behind the scenes, which is not necessarily to the advantage of unsuspecting buyers further down the chain. Sale prices at the lower end may require to be re-evaluated.

This is inefficient and ought to be changed otherwise the different local housing markets across England and Wales cannot begin to function more like perfect marketplaces as they should do.

All this happens because estate agents are primarily motivated to try and obtain the best price they can for whatever asset it is they are selling, since they are contracted to act on behalf of the seller. The buyer is often the last person to be told when bids in competition with their own are are being negotiated by the selling agent and then the only remedy remaining for them is to have to find more cash to increase their offer!  It operates rather like a sort of clandestine bidding war usually conducted over a telephone.

House prices as a result, are now passing all time highs but also, they are increasing beyond average couples’ annual earning capabilities for maximum borrowing requirements. This is a big problem especially where earnings are falling. It’s vital that a more generally acceptable approach is available to everyone embarking on house moves, especially if they are first-time purchasers. Purchaser mobility ought to be what should be improved.

The only way this could be done would be to change the way residential property is sold by having agents acting for buyers instead of only acting for sellers.

It is clear that existing estate agents are understandably likely to be reluctant to consider such a change for as long as they can continue to control sales progress in the way they have done essentially since the 1920s.

It would require the buying public to start complaining about the anomalies they are having to contend with when using agents, as well as to prevail upon government to make the necessary improvements to bring about fairer but competitive pricing processes across all residential property markets. Only then could house prices track buyer purchasing power in the localities in which each particular property is located.
The correct solution to this problem does need further in-depth explanation in order for the concept to be fully understood.

For a fully reasoned explanation about this, explaining exactly how such improvements might be achieved please go to:

The House Price Virtuoso Solution (otherwise known as The Hendry Solution)

The House Price Virtuoso Solution

Full details of my proposals for properly reforming the UK housing market.

Posted by: Peter Hendry, Housing Valuation Consultant
Author:– The House Price Virtuoso Solution

A new and dynamic Buyer-orientated marketplace in housing

What this country requires for solving its housing crisis is, most of all, a new and dynamic Buyer-orientated marketplace, where buyers can straightforwardly find and secure the most suitable houses for themselves, whenever this is necessary.

The objective is to create local housing markets where prices can find their market levels depending upon the information supporting those prices. This should primarily come from within the housing location involved. This also requires the information to be genuine and accurate. If a true balance between buyer wealth and seller aspiration could be accomplished in this way, all local housing markets could start trading more smoothly and more effectively than has happened for as long ago as the end of the war, i.e. since 1945. The rationale for this is more extensively laid out on this web site under The House Price Virtuoso Solution.

That is the broad picture, I am only painting it in outline here. The proposed new service would transform the existing experience of those trying to move house, from that of experiencing the difficulties of a moribund housing market (the situation at present), into a certainty-orientated market, with plenty of buying opportunity and more choice.

It is reported (as recently as 30 March 2021) that many house sales are taking as long as four months to reach exchange of contracts. This is obviously highly unsatisfactory and displays just how imperfect the current housing market places are.

Bringing the opportunities I outline here forward, would transform home ownership and allow it to become more popular than ever before and be a way to enjoy added financial security as well as providing the houses for individuals and families to live in.

To provide an example of why this change is so vital I would single out one scheme that was certainly intended to bring more buyers into the housing marketplace: Help To Buy. Whilst the name of the scheme Help To Buy attempts to describe what is intended, before very long it was rather poignantly re-labelled by many users ‘Help To Sell’ because that is actually what it is doing. It is really functioning to help people to sell, at prices which are being set primarily by the big house builders and this is then followed by individual estate agents and their house-selling clients.

The question remains, why is Help To Buy there in the first place?

Instead, what should be being debated and implemented is a change in the way houses are marketed altogether. For full details please follow the link below and by all means comment on what you may think about this idea for change too.

The House Price Virtuoso Solution

How house price stability may be achieved.

It is a full explanation of how to correct the present economic imbalances within the housing market and it provides reasoned explanations.

Further considerations of note:
Various changes to the operation of the markets are certainly required and what these changes are, becomes self-evident when the effects of the present distortions can be better understood using the analysis presented here.

The most significant change involves the role of those within the estate agency sector and as a significant number of the players involved are qualified surveyors, I am drawing this to the attention of RICS. My web site provides a clear overview of the problems needing to be dealt with, together with their solutions.

Changes of this nature will always need to go hand-in-hand with the necessary courage to actually put them into effect and, if both of these attributes are combined, amazing results would follow.

At present new housing supply, even with a favourable wind behind it and with maximum impetus from the government, is only growing by a few thousand new houses per year.

Relying on this rate of growth in supply alone, can only bring a tiny net gain as a percentage of the overall number of houses in the built environment.
The effect on market prices of such a tiny net gain can therefore be minuscule only. Confirmation of this truism is plain for all to see – especially for valuers noting the continuing unabated increase in house prices, despite the construction of more housing units to try and slow this increase. The only sane conclusion is: – there must be another way forward.

In essence and by deduction, the only way forward, is to deal with the current oversupply of ‘borrowings’ which are directly causing house prices to become more and more UNaffordable for those unable to access the increasingly large amount of mortgage finance which is then required.
The effect of denying many new buyers from gaining affordable access to house ownership in this way must, ultimately, cause market stagnation – something that no government would knowingly wish to encourage. Unfortunately however, many of us are already seeing this is beginning to happen.

The reason is that without first time buyers buying at sustainable prices to them, the whole market for houses will eventually start becoming tentative, sluggish and may even stagnate – something which buyers are, worryingly, beginning to see with many transactions taking (as I say), up to four months to get to exchange of contracts. No-one seems to be able to say how many of these transactions fail completely in the process.

Link: 30 Mar 2021
Many transactions taking four months from offer to exchange.
EstateAgentToday
The NAEA Propertymark is reported to say a record number of transactions are taking four months to move from offer to exchange.

It is clear that for years we have heard the finance industry telling us we should borrow more and/or that more finance is available to do this, especially for house purchases.
What they haven’t been so keen to explain, is that more borrowing results in higher house prices. This is the dilemma which is causing new houses to become UNaffordable and that, of course, will proportionately affect first-time buyers much more than everyone else.

To resolve this dilemma would involve convincing ‘the main financial institutions’, I call it The Big Muscle of the economy, to change tack at last and set a course for a proposed new trajectory of travel which I am placing before you here. The arguments in favour of doing so now far outweigh those in favour of maintaining the old and out-dated ways of marketing housing.

Please read as many of my supporting explanations as you would like on this web site. They give viewpoints from various different positions, culminating in thought-out and new proposals as set out in The House Price Virtuoso Solution (otherwise known as The Hendry Solution).

The House Price Virtuoso Solution

How to Improve the Housing Markets in England and Wales.

You can raise questions or make comments in the site itself if you wish. I aim to respond to all such questions and comments with suitable replies to the best of my ability. My aim in presenting these ideas now is to ignite serious interest in changing, for the better, housing markets in all locations, i.e. the individual ones which function locally all across England and Wales.

By providing a way for individual local housing markets to operate more efficiently, the improvements achieved would filter across and benefit the whole country and then all housing markets would start to function more dynamically and more as a single entity.

Posted by: Peter Hendry, Housing Valuation Consultant
Author:– The House Price Virtuoso Solution

Why are house prices still rising despite the downturn?

On the thorny subject of house prices, what we have right now are house prices still rising despite the economic downturn which is following the Covid 19 pandemic.

Why is this?
The reasons are actually straightforward but the current upward trajectory is not good news for those who need financial help to become home-owners in the future.

Research from Savills released in March 2021, estimates that the UK’s housing stock became worth £7.56 trillion – more than four times the value of the FTSE 100 index on the London Stock Exchange. These are seriously head-turning economic statistics!

What is particularly interesting, are the recent stats which explain that the value of mortgaged owner-occupied homes currently is only about £2.5 trillion, whereas there is £5.0 trillion worth of UK property which is owned completely mortgage-free. In other words this is twice as much as the value of today’s homes being purchased with a mortgage.

This would suggest that the main driver of the present government’s policy, is to continue to encourage capital growth in the housing sector. Such capital value increases obviously favour those who already have substantial property assets however, of course, the converse must therefore be true. These same policies can thus only hinder first-time buyers’ ability to become owners, as their purchasing ability is dependent upon and geared to earnings not capital values.

Polly Neate, the CEO of Shelter, is reported to be saying there is a “desperate shortage” of actually affordable homes for people on low incomes.

It’s simply no good putting up with what there is, or just continuing in exactly the same way as before.
We all have to change for the better. We should do this by treating first time buyers just the way we would like to be treated ourselves, even if we own houses outright. Houses are roofs over peoples’ heads rather than capital assets expected to appreciate in value before all else!

The House Price Virtuoso Solution has come up with the best possible new policy for the whole of the housing sector and for stabilising house prices within it.

In a nutshell the new policy is this:
Firstly, Neighbourhood Development Plans (or NDPs), which are readily available planning tools, should be adopted across the whole country and they ought to include similar purchasing restrictions to those which have more recently been enshrined in the St Ives, Cornwall Area NDP, the H2 policies.

These are to allow local earners a better chance to become local owners and to buy (rather than continue to rent) their principal residences.
As long as there are numbers of local earners who are not becoming mortgagor/owners, these people ought to be considered in preference to those simply having greater wealth and wishing to move to a new location of their choice.

The effect of this policy would be to help retain local communities functionally intact.
The alternative, which we have seen all too much of recently, is allowing whole areas to become ghost towns, owned by richer buyers from further afield. Allowing this destroys local communities of course.

One may easily understand that the present property-owning statistics demonstrate that a new policy is needed if we are to protect local individuality and preserve communities from societal desecration i.e. suffer the same fate that has befallen high streets up and down the country having become clones of one another lacking individuality over time. Specifically, I mean that we should save the character and cohesion of localities, from outside influences such as from those simply hoping to buy into a location just to gain an additional property investment for themselves.

BUT, something more than this is required if we are to stabilise the accelerating rise in house-prices and instead make way for a fairer and more inclusive house-price environment.
What is also required is a much better way to determine house prices themselves and it is this idea which I now put forward, naming it The House Price Virtuoso Solution.

In essence it is all about how to market houses in a way that can balance-out the different offers from competing buyers fairly and more equitably, resulting in a better marketplace for all those wishing to buy their next homes to live in.
It involves changing the way in which houses have traditionally been sold using vendor-led estate agency, to having new buyer-orientated agencies instead. Many of those who are employed in vendor-led estate agency practices currently could fairly easily get re-trained and become registered as buyer-advising agents.

These agents would handle incoming offers in a very different way by acting for and liaising with the different buyers. Sellers would be less able to influence the prices that are achieved because offers would be received directly from the buyers competing with one another, to the relevant buyers’ agents. These offers would be passed to the appropriate vendors by their own buying agents and this would allow house prices themselves to stabilise across the various different regions of the country. The mechanism by which this could happen would be by all offers becoming primarily dependent upon local buyers’ offer-price levels.

Only houses which are exempt from the H2 residence restrictions would be available for purchase by wealthier buyers from the rest of the country, these being outside the scope of these policies.

The above would help the success rate of individual housing transactions themselves, causing a general improvement in the number of house sales able to be made.

As explained, the goal of preserving local communities by providing sufficient and affordable homes up and down the country, whilst still allowing a smaller number of the wealthier buyers to integrate, could be achieved. Better price stability within all UK housing markets also would be the clear result.

For more information about my proposals for buyer-orientated agencies, please go to the specific page on this at the following link.

The House Price Virtuoso Solution (otherwise known as The Hendry Solution)

The House Price Virtuoso Solution

How to improve the Housing Markets in England and Wales.

Posted by: Peter Hendry, Housing Valuation Consultant
Author:– The House Price Virtuoso Solution

 

Resource links:
Savills:

https://www.twindig.com/market-views/houselungo-210321#slice

Shelter’s impact and activities:

https://england.shelter.org.uk/what_we_do/our_impact

There is flawed thinking going on right across the estate agency sector

Yes, there is ‘flawed thinking’ going on right across the estate agency sector.

It is to do with the price of houses!

Essentially, most estate agents believe that the more house prices rise, the more houses will eventually come onto the market.

The great flaw in this thinking is that it denies logic and flies in the face of economic theory too.
It has to be said that not many estate agents are experienced or qualified economists.
The majority of these individuals just want to sell houses.
They are not thinking of how this might best be achieved except on a per sale basis.

Instead, they have been (and still are), mistakenly postulating that if house prices should somehow keep rising and outperforming most other forms of capital investment, all will be well for those in the business of selling houses! This theory, as we have seen following the financial crash of 2008, has utterly failed to perform as anticipated, resulting in many estate agencies, both small and large loosing their livelihoods.

Nevertheless, and despite all of this, those estate agents still in the game, have doggedly carried on proclaiming that all was well, all was not lost. They tried their best to ensure that anyone wishing to buy had to ‘compete’ for those houses that they themselves were fortunate enough to be instructed to sell. It was more often than not a case of more buyers than usual having to make ’best and final’ offers during many sales negotiations, rather than estate agents simply allowing the market to decide what level the prices might be without further and tortuous negotiations, unhindered by an estate agents’ own view on prices in the marketplace at the time.
This accusation and I put it no less vehemently as making an accusation, suggests that estate agents in general have traditionally always aimed to talk the market up rather than look at the real tends in affordability.

The result of this travesty is what we now see. A yawning gulf between house prices as being those quoted across each region and what buyers in that very region could actually afford.

Once this damaging dilemma has played out, there is only one thing left which can happen – a widespread price adjustment in a downwards direction. The last thing on your average estate agent’s mind.

Of course, those left sitting at their dwindling desks would simply turn around and proclaim that it was the market that turned and that they were now simply doing what they have always done so well – talking the market UP on behalf of their collective clients – the sellers!

It’s a simple strategy designed to tout, not all that subliminally, for each and every sales instruction, no matter how few of these there may be at any one time. It usually works, it has seemed to work in the past.

However, what the market needs now is far more creative thinking. It needs this more than it has ever needed it in the past.

The nub and nugget of this is that the initiative must now be taken whereas before it could easily be skated over. We are at the road junction where those supposed to be dealing with these issues must at long last decide how best to deal with them.

My own dealings with the pricing issue have not been by working as an estate agent, though I have had my moments at providing that service on occasion. Instead, I have been working mostly at the valuation end of the property industry. This is a service which is there to advise property-owning clients how to resolve all the issues professionally and simultaneously, instead of dealing with individual issues like the price of one particular house, or trying to decide that on a singular basis.

What I have come up with through my property work is The House Price Virtuoso Solution.

For all those interested, the main tenets of this are set out at the following link and I unhesitatingly commend it to you to be read with an open mind; and an open heart if you should want to help everyone to resolve this seemingly intractable problem. The price problem (or how to find the true market price), has been a feature of housing markets in all regions of the UK for decades now and it really is time that the whole house-price issue was finally resolved for the sake of everyone’s sanity and even more importantly perhaps, for everyones pockets too.

Please go to the following link to read these new proposals:
The House Price Virtuoso Solution (otherwise known as The Hendry Solution)

The House Price Virtuoso Solution

How to Improve the Housing Markets in England and Wales.

Governments have come and gone without successfully dealing with this, so lets hope one day all this will change and we can all then move forward and enjoy new and better housing availability, appropriate property pricing and enjoy better standards of construction.

Posted by: Peter Hendry, Housing Valuation Consultant
Author:– The House Price Virtuoso Solution

House Prices v General Affordability

To any impartial observer there is something ominously wrong with house prices across Great Britain!

They are not behaving as all other commodities are, since they are continuing to increase when average wealth is in decline, especially following the Covid 19 pandemic.

Sweeping reforms are now sought from those in government.

Just as Britain has led the world in many things in the past so it should do so again right now, by re-balancing housing market economics.

House prices should follow (or trend) modal average earnings rather than be dependent upon unregulated mortgage loan availability.
This is even more vital when loan interest rates are at an all time low, as is the case right now.

What are modal average earnings? The mode is the value which occurs most often in a set of data. For example, if three people were all paid £1,000, and this is the most common value, we would say £1,000 is the mode.

IF we fail to make this adjustment, prices will simply remain unaffordable to average earners in the long term and this isn’t a just way for such things to be.

I suggest IF this adjustment is not made our housing economy will end up wrecking our nation’s economy.
I ask, who would want that to happen?

Having worked in the housing and property sector for over 30 years, I hope I can be regarded as sufficiently qualified to set out carefully considered proposals for dealing with this crisis.

Please go to the following link to read these new proposals:
The House Price Virtuoso Solution (otherwise known as The Hendry Solution)

The House Price Virtuoso Solution

How to Improve the Housing Markets in England and Wales.

Posted by: Peter Hendry, Housing Valuation Consultant
Author:– The House Price Virtuoso Solution