Monthly Archives: June 2019

There needs to be a route and branch change in the way houses are marketed

Published / by Peter Hendry / Leave a Comment

The truth is:

Rank capitalism, as we have come to know it, does not work for a majority of us especially when it comes to house ownership.

Whilst I’m certainly not a committed socialist I can still see the difficulties in the existing capitalist model, especially as it has affected house prices over the past several decades.

Basically, those who already own houses themselves naturally hope for prices to keep increasing.  Above inflation price-increases are preferred by such owners and anything more is very much applauded whereas price falls are most unwelcome for them.  Not unreasonable logic one might think, on first gaze.

For first time buyers however, price falls are desperately hoped for especially nowadays, as being a possible way to enable these people to somehow afford to buy whilst many still find it absolutely impossible to even contemplate doing so.

For these people the only alternative to living in a house of their own once they become adults is to rent, especially when they have family responsibilities to consider as being their top priority.

This alternative involves paying what are already high rents compared with average earnings, and these rents keep on increasing year on year.

Renting therefore impacts on such peoples’ ability to save to eventually buy their own home and in quite a few cases, renders it completely impossible for them to do so.

Banks are, it must be seen, complicit in seeing that house prices stay high, especially as it allows them to lend more money whilst having the security of loans secured on property by way of a mortgage.

The bulk of many bank and building society net profits understandably comes from earning interest on mortgage loans.

The problem is, none this helps would-be buyers!

Yet by not helping these buyers, the banks and everyone else in the business of supporting the economy, including dare I say estate agents themselves, are actually loosing out by not selling to the buyers out there at sufficiently affordable prices to allow sufficient sales to take place.

A more uniformly priced housing market is urgently needed and a return to true affordability and availability has been needed for decades.  If only one of our political parties would wake up to this fundamental need by including a workable strategy in their manifesto, change for the better could soon start to be introduced into the existing housing markets.

The recent labour proposal to replace Council Tax with a property value tax would not only add further taxation to an already highly taxed part of our economy but would also do nothing to deal with the market inefficiencies to which I am referring.

Taxing specific markets is not the correct way to reform and improve their function.  This was historically shown not to work in the 70’s when the Labour government brought in Development Land Tax.  Instead it is time new policies were crafted to fully address the specific problem of increasingly unaffordable house prices.  I would have thought Labour, of all parties, would have understood this by now.

The only way to restore price affordability and availability in the housing markets up and down England and Wales would be to make these markets perform more efficiently and more transparently. 

If true and fair market prices were established, without such high borrowing requirements, more people could step onto the housing market and they would generate many new transactions as they began to do so.

These new people would, of course, be utilising the housing they have just purchased, whereas currently there are far too many houses bought simply for capital gain and some are even left empty in the process!!

Restoring the prospect of owner-occupation as a feasible option for average families once again, would appear to be an essential policy to adopt for any prospective new government.

If you want to read about how a change to having efficient property agents could be put into practice, please Google ‘The Hendry Solution’, or go to the following link:

The Hendry Solution: Full details of our proposals for properly reforming all housing markets in England and Wales.

Peter Hendry – author of The Hendry Solution

How can the housing market be made more efficient in Britain?

Published / by Peter Hendry / Leave a Comment

[Article expanded – 20th June 2019]
On face value one might be forgiven for thinking that if you want to sell a property, you might simply advertise it for sale or employ an agent to do just that.
But have you ever thought; Can the housing market be made more efficient in Britain?

To help answer this, if you were selling any other item such as a car or a boat for example, advertising it or using an agent to do so would be a reasonable thing to do but not with houses as I will explain.

With houses things are different because houses are capital assets, rather than depreciating ones. In other words, they are not mere chattels to be chalked up at a notional price and simply sold.

How is this so?

It’s because the amount of work and expertise required to build a house is sufficiently great to cause its value in the market place to adjust, upwards or downwards, depending on buyer’s demand and their ability to pay to purchase the property.
Secondly, houses are expected to last for around a century, which is different to most other things that are sold or let.

Thirdly, the availability of finance or mortgage borrowing is another primary factor which affects the prices of houses in the marketplaces wherever they are situated.

Question:
Why can’t a selling agent just deal with all of that?

Because the important aspect when selling is to know and understand how many buyers are out there and what might they each be prepared to offer (or bid) once they have everything in place to make a final decision. Buyers also need to arrange things they need like a survey, a confirmed mortgage offer, completed legal searches etc…

The best people to deal with all these matters would unquestionably be an agent acting specifically for the buyer in question.

Only they could best represent each buyer and in fact therefore could also serve vendors to best advantage too.

Why would this be an improvement?

It would be an improvement because selling agents do not, in fact, act for any of the buyers whereas buying agents would be able to do so all the time.

Selling agents can only act for those selling their houses. This is half of the marketplace of course; and that’s exactly where the problem lies.

Registered House Buying Agents, [RHBs] on the other hand, would be acting for multiple buyers simultaneously so they would be fully in touch with these buyers as well as knowing what houses are currently available for sale on the market. They would know all of this because their other buyers will be among those selling too.

The difference between the two types of agents is that with selling agents, once they sell a property on behalf of their vendor-client, they aren’t interested in who else is buying. They’re only interested in who else may be selling!

Working in that way is, as I say, only dealing with one half of the housing marketplace at any one time. It is this which is causing the housing marketplace to malfunction or to perform badly. It is this which is causing wild price swings upwards and downwards, depending upon the availability of purchasing power (or buyer demand) at the time.

For as long as the existing estate agents are isolating themselves from being responsible for dealing with the buying side of the housing marketplace, price anomalies will continue.

The result must be more of what we see today, buyer frustration at what might have been, as regards home ownership.

Using this logic (as well as other arguments), I emphatically suggest that the existing vendor-centric estate agent model is no longer fit for purpose, is out of date and is way too inefficient.

If you want to read about how a change to having more efficient agents may be put into practice please Google ‘The Hendry Solution’, or go to the following link:

The Hendry Solution: Full details of our proposals for properly reforming all housing markets in England and Wales.

Extra reading:
Article in The Property Industry Eye dated 9th May 2019 giving the current market downturn information:
Estate agents are reporting a drop in property instructions: New instructions sink to a three-year low – and worse is expected.

Peter Hendry – author of The Hendry Solution