Kick-starting economic growth is now top of the agenda 

Given that the new government is committed to bringing back growth to the economy, a fundamental way to bring this about would be to facilitate the lowering of house prices which are now at an all time high.

The first question is, how can this help?
It can do so by enabling more buyers, especially first-time ones, to purchase their property for less, rather than have to borrow more. This would mean people’s earnings would allow the purchase of essentials like housing for themselves more easily.

The cost of living would also become lower as a result of this, meaning manufacturing and business could become more competitive allowing increased sales of its products for export.

This may seem counterintuitive at first sight but it would in fact be a direct way of boosting exports.

The second question, how could median house price levels be lowered?
By improving the way houses are marketed, so that prices would depend more on each individual’s level of affordability rather than each having to rely upon borrowing increasingly eye-watering amounts of capital against the property being purchased by way of increasingly large mortgage loans!

The way this could be done, in brief, would be for buyers to submit arms-length offers (or bids) not to the present-day estate agents but to newly licensed and trained residential housing agents (RHAs), contracted to act for them in seeking the best house for their needs. This would be a significant departure from the present system where the seller appoints an estate agent employed by them to obtain the best possible offers (including helping each buyer to borrow as much as mortgage lenders might be willing to lend to the buyer against the property deeds, that would be held as the loan’s security).

A knock-on effect if such a new RHA regime, were to be brought in, would be to reduce the land value aspect of each property valuation. By doing this, developers could continue to build at economically viable development costs. This is a well known aspect in residential property valuation.

Reading this, you will no doubt appreciate that matters relating to house price levels are actually somewhat more complicated than they may be at first sight. Surveyors and valuers are aware to this but in my experience, many estate agents sadly are not.

My knowledge of this is based upon my valuation training and approximately 30 years experience as a residential property valuer and surveyor.

This allows me to isolate ways of enabling lower house prices without adversely affecting the profit level of builders and developers expected to maintain the quality of housing desired, yet allowing the affordability of most housing to improve at this highly critical time.

For more on this please follow the link below:

The house price affordability crisis

Posted by: Peter Hendry, Housing Valuation Consultant

Author of:– The House Price Solution, otherwise known as The Hendry Solution.

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