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.
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’.
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 Hendry Solution