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

[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 require 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 Virtuoso Solution’, or go to the following link:

For more information about what it is that I am advocating must be done, please see:

The House Price Virtuoso 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.

Posted by: Peter Hendry, Housing Valuation Consultant

How to get the British housing markets back up and running without waiting for Brexit to be resolved

Here is my analysis of how to cure any stagnation developing within our housing markets:

The downturn for most local housing markets across England and Wales actually started to manifest before the Brexit uncertainties themselves began to take effect.

The best way to avoid cyclical downturns in housing markets is to lessen them by making sure the prices being quoted are as genuine, fair and as fully transparent as possible. That’s something that clearly isn’t happening and cannot happen whilst the agents negotiating each transaction are acting primarily for sellers with unrealistic expectations coupled with a percentage to be extracted by the agent on completion.

As buyers are being ‘turned off’ more and more because of over optimistic asking prices, sellers are simply failing to sell and so the markets are forced into stagnation.

Eventually, sellers have to lower their prices when they are forced to find buyers, because they need to move and cannot wait any longer. It’s an uncomfortable situation for both parties by this time. The one redeeming aspect of all this is that having just sold, the newly created buyer will be able to negotiate to a similar degree with the sellers of the next house they decide to buy!

This set of circumstances happens in almost predictable cycles across all housing markets and it has been doing so for many decades past.

It’s time to move to resolve this cycle of crises for the sake of everyone involved.

The ONE way this may be accomplished would be to change the way houses are marketed by using agents to assist buyers in searching for and purchasing their next house to live in and no longer use agents acting solely for vendors or sellers.

For more information about how this may be accomplished, please read the following series of articles on this blog, especially the one found on the link below – The House Price Virtuoso Solution. It gives full details of my proposals for resolving this issue and explains the method to improve the workings of all housing markets across England and Wales:

The House Price Virtuoso Solution otherwise known as The Hendry Solution

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

Despite the major economic indicators currently pointing downwards for house prices, inexplicably, they have still been rising recently!

We at improvethehousingmarket.co.uk have THE fix for this and we are going public with it.

The House Price Virtuoso Solution explains how to use cutting edge methods to bring house prices in England and Wales back to sound levels of affordability which are suitable, not only for those wishing to become first time buyers but to all other home owners too. Rents for residential properties also desperately need to be more competitively priced within the marketplace.

Anyone interested in seeing this outcome take shape in the owner-occupier housing sector may read about the necessary methods for bringing this about right here:

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

The cost of implementing this fundamental change would be low and perfectly feasible.

The objective of this new market-making concept is to allow all buyers to buy their next homes at prices which are truly affordable and within reach.

The difficulty at present is that practically unrestricted lending for house purchases is damaging the housing market and ruining the opportunity for many of those whom are ready to buy and ready to make their purchasing commitments.

The price problem needs addressing this year but the government are the ones to have to instigate these required changes and until they do they cannot be introduced for the benefit of the majority.

Besides helping in this respect The House Price Virtuoso Solution is also a way for those who have gained considerably from property price increases over the past 30 years or so, to pass some of this back to help those trying to climb onto the first rung of the property-owning ladder right now. The big win-win situation is, if everyone were to adopt this new policy, no-one would loose out financially.

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

Interesting Reading:
UK estate agents are at their gloomiest for 10 years, says RICS

The primary justifications for sales and marketing reform in all housing markets across the UK

The cause of the failure of large numbers of buyers to be able to continue to afford to get onto the housing ladder is primarily on account of government banking and finance policy.

10 years have past since the 2008 financial crash and the effects of using quantitative easing (QE) are, at last, beginning to reveal themselves.

Virtually all capital assets have increased in value against sterling, whilst savings have simultaneously experienced a decrease in value – in real terms.  This situation, as everyone will now undoubtedly realise, does include significant price increases right across the housing markets.

The effect of this policy has resulted in a majority of millennials (i.e. people coming-of-age around the turn of the millennium) becoming unable to afford to buy houses.  Instead they will have to accept becoming long life tenants as being the only viable alternative to having to stay with their respective parents into middle age.

In my opinion, along with many others, this is a sufficiently bad effect to warrant a complete re-think of the way monetary policy is managed both by government and equally as importantly, by the separate institution of The Bank of England itself.

Here is the brief reason for this conclusion:

10 years ago (2008), the government was faced with coming up with a rescue plan to deal with the global financial crisis which was seriously affecting Britain as well as the currency markets in America and other major nations’ currency markets.  The required decisions were extremely time critical.

As a response, the government decided to authorise The Bank of England to issue digital money to purchase government bonds as loans for use to fund public borrowing by financial institutions.

The effect of this (which was well known at the time) would be to reduce the yields on such bonds owing to the increased demand for them.  The secondary effect (which would also have been known at the time), was that we were going to have to accept permanently lower interest rates across all financial markets.

This would result in banks everywhere having access to more funds to lend but (and this is a big but), they would then need to lend more money in order to earn enough from the lower rates of interest able to be earned from it.

The scale of QE engaged upon following the crisis was huge and at unprecedented levels.  Indeed such a course of action had never been tried to such a massive extent previously, even though it was deemed essential and the only plausible course to take.

Knowing that this was about to happen in the USA our government decided, along with The Bank of England, to follow suit.

The effect was going to be that suddenly, practically everyone in employment would start to have more borrowing ability and hence more purchasing power.  This was intended to help the economy to recover and save it from diving into a full blown recession.

The policy however would, at the same time, adversely affect those with savings to the extent that the interest earned on all such savings would no longer keep pace with the erosion of the value of their savings both by the risk of inflation as well as the severely reduced interest rates expected to be obtainable.

What the government was perhaps understandably somewhat coy about however was, knowing the only way to counteract the resultant inflationary pressures following the severe dose of QE which was about to be prescribed, they would have to simultaneously engage in a severe program of austerity cuts.  This they did with a determination that suggested their lives (or at least their appointments) depended upon it!

The unavoidable difficulty in doing this was that more substantial mortgages, to be available to those who could afford to borrow, would cause house prices themselves to increase very substantially.  In some places house prices have actually increased by between 40 and 60% over the past five years alone because of these policies.

As wages were never going to be able to keep pace with such increases, those having to save for a deposit to buy a house were soon finding themselves unable to save enough fast enough to keep up with expected house price increases.

The result of this, as we can now clearly see, is that many hopeful first-time buyers have had to defer and in many cases completely give up the aspiration of ever becoming home owners in their own right.  This is a tragedy for all of them and is now clear for everyone to see.

Owing to the resultant house price increases the direct effect of QE has been to cause a very significant slow-down in the numbers of houses being sold across all housing markets, certainly in England and Wales.  Whilst this is true it has not been very well documented, perhaps for fairly obvious reasons.

A further side-effect is that estate agency is suffering significantly, since they generally get paid after the sales they have actually arranged are completed.  Thus they are suffering a similar fate to other organisations more directly subject to the targeted austerity measures.

The true aftermath of the risky QE approach embarked upon is now becoming clear.  We are destined to be stuck with very low interest rates for years to come and our house prices, like a mirage appearing to stay just out of reach of the thirsty, will remain similarly out of reach of a large proportion of future home-makers or home owners.  There seems to be no easy alternative – now that we have been driven down this particular road for such a great distance and to a large extent, in our own ignorance.

There is however one way in which houses may be priced more competitively and market sales turnover thus restored.  It is what is advocated by The House Price Virtuoso Solution which is explained more fully in the link below.

Implementing this solution would greatly help both the present and future affordability of all houses by improving open market conditions.  This would allow the prices paid, to more closely match peoples’ ability to buy instead of having prices set based largely on the projected financial returns of house builders and developers – as generally happens at present.

The House Price Virtuoso Solution is a new and innovative way to make all housing markets across the land behave more in accordance with what local people can actually afford, by placing less reliance on vendors’ asking prices as being the primary price mark.

In the long run The House Price Virtuoso Solution, if implemented, would begin to restore confidence by enabling successful house purchasing across all areas, both within our towns and in our country.

I therefore strongly suggest that this proposal should receive detailed examination and I would encourage healthy debate in regard to it by all those with genuine knowledge in the housing sector.

To find out how such a significant market improvement could be achieved, please go to:

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

Posted by: Peter Hendry, Housing Valuation Consultant

Supplementary reading:

BBC article on QE

propertyindustryeye article about first-time buyers and the housing market

Further justification for changing the way houses are marketed within the U.K.

Justification 2:
Before much is said about the reasons for the pricing problems perhaps the most important thing to be known and understood, is the fundamental reason why house price rises have been happening recently, despite our general economic trends falling.

Firstly, it is essential to know what distinguishes house sales and purchases from almost all other sales and purchases. It is that houses are capital assets and not chattels. This means that the values of all such assets vary in the market place, dependent upon the current demand for such assets.
In other words, such assets have an ‘intrinsic value’ which can both increase and decrease, depending upon current market conditions whereas things that are not within the class of capital asset, generally only depreciate in value as they age.

For this reason in particular, all those owning houses should treat them as such and not merely regard them as being something which can be marketed by the seller without taking the all-important ‘buyer’ considerations into account.

Justification 3:
It is of fundamental importance that houses should be regarded as having special characteristics in terms of their true current market values. If not, they cannot be bought and sold successfully in the marketplace.

The current way this is done does not have due regard to this aspect and the result is general chaos, with price disparities constantly rippling across the whole of the housing marketplace – generating unnecessary uncertainty.

The frequent delays and transaction failures which happen as a result, are testimony to this and they show that there is a need to substantially revise the way that things are done in these markets.

The way to resolve this situation correctly, is to alter the existing methods used to market these assets and instead treat them as capital assets in a similar way in which shares are traded on the stock market. I mean by this that buyers are and must be integral in deciding the prices-levels at which such assets ultimately change hands.

The House Price Virtuoso Solution gives the detail of how this may be achieved without excessive cost or delay and I hope you find these new proposals to be both interesting and worthy of consideration.

Justification 4:
In essence, what is required is to reform the methods by which estate agents operate in the housing market and this reform is now long overdue.

The necessary fix cannot simply be about building more houses to try and balance supply and demand, as claimed by many whom I have discussed this with. Instead it must be about making the housing market itself function far more efficiently. This may well (but perhaps understandably), be something which estate agents themselves are currently reluctant to seriously consider.
Nevertheless, this is what is needed, even more than starting to get additional housing units built as soon as possible.

There IS a better and quicker way, besides that of building many more houses which, by any degree of estimation, would have to take nearer ten years than just one if indeed such a proposal should even be capable of any degree of swift implementation somehow? More about that later!

Justification 5:
As stated, the housing market is broken, with prices being forced up beyond most people’s ability to pay.  This is not however solely about supply and demand, as I am keen to explain here.

It is also about money finding its way into the housing market illicitly, without sufficiently rigorous financial checks being made.  It’s essentially about selling agents (the estate agents) having become oblivious to this as well as a number of other issues – since their primary remit is simply to try and get the highest price possible for each property which they manage and sell on behalf of a vendor client.
Yes, estate agents will happily try and maintain that house prices are decided simply by supply and demand but this loose statement does not bear any serious scrutiny. A rudimentary knowledge of economic theory will undoubtedly confirm that.

Consider for a moment:
Dodgy money (or the money that requires laundering) which has caused significant house price inflation recently …
And:
Over-borrowing The rules for ascertaining who should be permitted to borrow, for what reason and exactly how much should be tightened – especially whilst such large sums are able to be borrowed so cheaply.
And:
Lack of valuation knowledge There’s a general lack of adequate valuation knowledge (and experience) possessed by most agents in the property sector currently …
And:
Bias towards vendor negotiations
There is a worrying lack of transparency concerning the way in which estate agents operate nowadays, especially as far as buyers are concerned.
Changes need to be brought in by government as agents themselves would clearly prefer not to do so whilst primarily supporting their clients, the vendors.
And:
Exaggeration
Meaning that lies, deceit and broadcasting misinformation are nowadays pretty rife amongst competing agents, whom are forced to utilise such tactics in their quest to each gain more instructions to sell or let.

It simply cannot be denied that each of these highly unacceptable behaviours are playing too great a part in deciding current-day house prices in England and Wales and that such matters have clearly not been adequately addressed so far by any responsible organisation including our government.

To find out how such a significant market improvement could be achieved, please go to:

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

Posted by: Peter Hendry, Housing Valuation Consultant

There needs to be a sea-change in all housing markets across England and Wales

Why? Because the existing methods of marketing houses across England Wales are a violation of buyers’ rights and the general economic rules for arriving at fair valuations for residential property in the open market.

The methods used by estate agents are aimed at maximising prices for vendors at the expense of and to the disadvantage of buyers whilst also allowing banks to gain substantially by lending more. This is patently wrong and should be stopped.

To resolve this crisis I am asking our ‘government’ to stop the over lending by banks and borrowing institutions, causing house-price escalation in England and Wales currently. It’s time to fully re-assess this predatory and over-used policy.
It’s no good trying to prop up house prices at the expense of genuine open market affordability.

The solution to this crisis is fairly obvious.
It depends upon logical arguments, explaining how to bring about a fair and an inclusive way to buy, sell and to let privately owned houses across the whole of England Wales, especially to benefit the all-important first-time buyers and of course tenants hoping to become buyers.

There are now clear answers to the problems which such buyers are undeniably facing and these are becoming clearer as time goes by but a certain amount of bravery would be needed to effect the changes necessary to secure a sound housing market providing fair opportunities to those currently trying to buy, sell and rent houses to live in. Also, this would benefit those performing the vital agency work involving marketing and advising particularly buyers but also sellers regarding the sales and purchases which they wish to execute.

Genuine debate at a high level should be held on this.

To find out how this could be done, please go to:

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

Posted by: Peter Hendry, Housing Valuation Consultant

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 interlinked chains is frequently going on behind the scenes which is not necessarily to the advantage of buyers further down the chain.

This is inefficient and ought to changed so that the various local housing markets across England and Wales can begin to function more like perfect marketplaces; as they should.

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 things are going against them and by then the only remedy remaining is for them is usually to find more cash to feed into the situation!

House prices are now returning to all time highs, but they are also increasing beyond average couples’ annual earning capacities for borrowing requirements. This is a big problem. It’s vital that a more holistic approach is offered to everyone embarking on a house move, especially if it’s a first-time purchase.

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 for sellers.

What stands in the way of this happening is that existing estate agents are naturally going 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 historically, essentially since the 1920s.

It would require the buying public to start seeing the anomalies they are having to contend with when using agents and to expect government to make the necessary improvements to bring about fairer competitive pricing across all residential property markets. Only then could house prices more appropriately track buying power in the locality in which a particular property is located.
This situation 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 this should be achieved please go to:

The House Price Virtuoso Solution: Full details of our proposals for properly reforming the UK housing market..

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

Latest government funded research into the crisis within the housing markets across England and Wales

Here’s news (published in February 2018) on the then recent government funded research into the crisis existing within the housing markets across England and Wales.

An awful lot remains to be done to assist those wanting (and needing) to start buying their first houses or flats and thus later to be able to move to better accommodation as and when, and wherever they may require.

The Economic and Social Research Council have funded the recent research on the decline of homeownership among young adults through the Secondary Data Analysis Initiative (grant number ES/N011872/1) and the Centre for the Microeconomic Analysis of Public Policy at the IFS (grant number ES/M010147/1).

The online link to the IFS research is:
https://www.ifs.org.uk/uploads/publications/bns/BN224.pdf
The decline of homeownership among young adults.

The IFS are so right about the decline in home ownership. It’s a societal loss.

Alongside this I have worked on producing a policy designed to resolve the current problems within all housing markets across England and Wales.

My conclusion is that there is only one certain way to resolve this dilemma. My explanation covering this may be found at the following link.

The House Price Virtuoso Solution.
How to Improve all Housing Markets in England and Wales.

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

The housing market is desperate for economic reform to bring everything back into line with local affordability.

It’s so obvious that the housing market is desperate for economic reform, to bring everything back into line with local affordability?

Please see:
The state of the UK housing market in five charts: The housing market is desperate for economic reform to bring everything back into line with local affordability.
An especially good article with graphs by Tom Ough – 2nd Sept 16.

My proposal for the way housing in England and Wales should be marketed, is based on changing from vendor-centric estate agencies to buyer-oriented ones as described in The House Price Virtuoso Solution (otherwise known as The Hendry Solution). This would not cost much to implement and would bring massive benefits to all local marketplaces.

To read more about The House Price Virtuoso Solution go to the following link:

Improve The Housing Market.
How to Improve the UK Housing Market.

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

Simply building more houses can’t solve the housing crisis

Obviously we need to get more houses built, both for rent and to buy but developing this as a strategy for calming the housing market is not going to remedy the prices uplift which we have recently experienced. It cannot do that simply because building more can’t achieve anything for as long as the considerable time it would take to actually complete the building of the extra housing required.

The market itself is in need of intervention and this does require the involvement of government. A government that can put effective policies into practice faster than the simple but over-quoted ‘build more’ idea.

My solution is to overhaul the way in which houses are marketed, both for sale and to let by changing the way agents themselves operate.

A more market friendly method is required so that house prices can be attuned more towards peoples ability to pay, with less of the speculative pricing by agents, whom currently act only for the vendor legally. It is this which requires urgent attention.

A more transparent housing market would not only take the froth out of asking prices but would have the added effect of calming rent levels too. For more information please go to the link below:

My proposal for the way housing in England and Wales should be marketed, is based on changing from vendor-centric estate agencies to buyer-oriented ones as described in The House Price Virtuoso Solution. This would not cost much to implement and would bring massive benefits to all local marketplaces.

To read more about The House Price Virtuoso Solution (otherwise known as The Hendry Solution) go to the following link:

Improve The Housing Market.
How to Improve the UK Housing Market.

Posted by: Peter Hendry, Housing Valuation Consultant.