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