It is time to re-balance the price-anomalies in housing

It is time to re-balance the price-anomalies in housing by letting the buyer become more fully aware.

Housing markets, certainly in all areas across the U.K., have been akin to living a nightmare from any buyers perspective for decades now. As a property valuer, having worked from the seventies in property, I am free to comment with no axe to grind, in particular concerning the ever increasing gap between buying power and asking prices.

Most of those whom I chat with are of the same opinion which is that the general lack of affordability is unacceptable. The notion of trying to bridge the gap by increasing borrowing ability is a non-solution. Instead house prices, especially for those starting off with their first homes, are required to become lower so that transactions may be concluded by more people requiring housing. The question of course is how may this be achieved in practice?

In brief, it may seem a clever idea to build more houses to try and satisfy more of the present demand but doing so will only have an affect on buy-prices once very many houses and flats have been constructed. Essentially therefore, using this method simply isn’t going to have much impact on house prices for a good while. House builders themselves would, of course, have been well aware of this when first suggesting it but it does not have to be this way.

The best way to lower house prices sufficiently would be to make the actual process of finding and purchasing a new home to live in, much easier. Doing that is absolutely critical. I say that because that is the elephant in the room when it comes to finding the way to make housing markets more price-efficient at long last. The present arrangements are old and frankly Dickensian in terms of their methodologies and it is that issue which needs to be fully addressed.

The modern way to cure the present house price anomalies would be to have a completely new breed of agent fully and exclusively representing the buyer instead of representing sellers. Prices struck in the market under such a new scheme would be entirely dependent on buyers’ purchasing ability rather than buyers + lenders ability as at present.

For more details of this exciting departure from the old regimes and a way of bringing new life to a moribund marketplace, go to our article entitled:

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.

Copyright © Peter W Hendry in Cornwall. All rights reserved.

 

For arguments in support of these proposals please refer to:

Recent article in The Economist.

Recent article in The Economist.

Will house prices ever stop rising faster than inflation?

I have worked as Chartered Surveyor in the property sector from the 70s to the 90’s. During this time I have seen the relentless upwards direction of travel of house prices as related to true affordability, based on general earnings at first hand.

The golden dream of becoming a home owner by purchasing using mortgage borrowing repayable over the next 25 years, was something that was every young family’s ultimate ambition. This has morphed into a nightmare more recently. Why?

First of all, landowners have increasingly scooped-up increasing gains on the value of the land involved – by relying on the increased amounts to be borrowed by both first-time buyers and others further up the property chains.

Secondly, the banking and finance sectors have hijacked most of the profit remaining to be found and taken the biggest slice of it for themselves. In other words those institutions lending capital on mortgages have annexed a greater and greater share of the profits by advancing increasingly large amounts of finance. More recently, they are even prepared to increase the mortgage term length beyond the original 25 year repayment period, moving towards 30 years or more which is questionable.

Simultaneously, interest rates, which have dropped to extremely low levels at the moment are enabling buyers to over extend themselves using loans they should not actually be taking out.

The super-rich, on the other hand, are able to utilise the same unrestricted availability of mortgage finance to outbid the rest using the collateral they already possess.

Shared ownership schemes (part rent part buy) have begun to appear which further decrease the actual dream of owning a whole building and the plot it is built on, in one’s lifetime.

House prices are being talked-up increasingly by estate agents whose primary interest above all else is to make the sale at the best price possible.

Employment is becoming more uncertain with flexible working hours making earnings unpredictable.

The actual cost of living is going up whilst basic wages are not keeping pace.

The housing market’s core buy-prices are further adjusting to match the above changing parameters. This has tended to happen in the past but the graph is exponential and it is set to continue in the relatively near future because house prices themselves are set in a practically unregulated market. In such a heady market those who will have over extended themselves will, as a result, suddenly find they have a big financial problem.

The more wary amongst all the potential first-time buyers, are understandably holding back.
Apart from being wary, the main reason for this is that asking price levels of ‘so-called’ affordable housing today, are no longer truly affordable.

The only solution to this pernicious problem:- is to lower the buy-in prices of housing for all owner occupation.

How? That is the question?

The answer, as provided by those in the financial sector, is to offer to build more houses to increase the supply so that prices will finally and in theory reduce!

The main flaw in this argument is that it will take many years worth of building new housing (certainly if traditionally constructed), before sufficient numbers of them could push the prices down a little. In the meantime, builders, landowners and mortgage lenders would expect be able to carry on making their profits unhindered!
By the time the massive building boom will have begun to have had an effect, they will have made all the profits they were hoping to make for themselves.

The other, more appropriate answer would be to make the necessary changes to the way houses are bought, sold and let. Doing this now, alongside building more housing units, is the ultimate and best way to restore the housing economy into good health once again.

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
Author:– The House Price Virtuoso Solution
Copyright © 2020.

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 a housing market where prices also find their market levels depending upon the information supporting those prices. This should primarily come from within the housing location involved and would require this 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 since 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.

This is the broad picture, which I am painting 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.

Bringing such opportunities 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 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’ attempted to describe what it intended to do, it wasn’t long before it was rather more poignantly re-labelled by many users ‘Help To Sell’ because that is actually what it was doing. It was really functioning to do precisely that, at prices which were being set primarily by the big house builders.

We now hear that ‘Help To Buy’, which is already restricted to use by first-time buyers only, will soon be further restricted to be for loans only for new houses from 2021.
It will also have regional price caps, designed to try and reduce the maximum value of homes that can be bought through the HTB Equity Loan Scheme! This is clear proof that the scheme never fulfilled the purpose for which it was initially designed and therefore, has massively underperformed.
Help To Buy is due to be withdrawn completely by the government by 2023 but the question remains, what should be its replacement?

The path to be taken for adequately dealing with the present housing crisis is not clearly evident. At present there is no known or obvious path to be taken. Nevertheless logical deduction from an economic viewpoint unquestionably does now point towards one.

It is a path able to show the how and the why. How, exactly, it could be achieved is at:

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.

Now for the why:
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 are better understood, using the analysis presented.

The most significant change involves the role of those within estate agency and as a significant number of players involved in this sector are qualified surveyors, I am drawing this to the attention of RICS. My web site gives the detail necessary to provide 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 courage to actually put them into effect and, if both of these attributes are combined, amazing results can be derived.

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, would only bring a tiny net gain as a percentage of the overall number of houses built.
The effect on market prices of such a tiny net gain can, therefore, only be minuscule. Confirmation of this truism is plain for all to see – especially for valuers noting the continuing increase in house prices despite everything done to try and slow this. There has to be another way forward.

In essence, the way of progression which I am pointing out here, is to deal with the current oversupply of ‘borrowings’ which result, directly, in house prices becoming UNaffordable for those unable to access such mortgage finance themselves.
The effect of denying specifically new buyers from gaining reasonably affordable access to the the housing market in this way must, ultimately, cause market stagnation – something that no-one would happily encourage. Unfortunately though, many of us are already seeing this is beginning to happen.

In other words, 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, now seeing of course.

For years we have heard the finance industry telling us that we need to borrow more and/or that more finance is available to do this, especially for all 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 will, of course, proportionately affect first-time buyers much more than anyone else.

To resolve this dilemma would involve convincing ‘the main financial institution’, as the Big Muscle in the economy, to change tack and go along with the 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 status quo.

Please read as many of my supporting explanations as you would like to on this web site. They give viewpoints from various different positions, culminating in the thought-out new proposals set out in ‘The House Price Virtuoso Solution’.

Anyone can raise questions or make comments on the site itself if they should wish. I intend to try and 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 interest in changing, for the better, housing markets in all locations, i.e. the individual ones which function locally across England and Wales. By providing a way for them to operate more efficiently, the improvements achieved would then filter across the whole country and all housing markets would start to function more dynamically and as a single entity.

Posted by: Peter Hendry, Housing Valuation Consultant
Author:– The House Price Virtuoso Solution
Copyright © 2019.

Intro to: The House Price Virtuoso Solution – the key to fairer house prices

The Independent newspaper recently published in its online version the headline:
More than 8 million people in England are living in unaffordable, insecure or unsuitable homes, the report says.
If accurate, this predicament is unacceptable and in urgent need of remedying.

There have been many claims of similar housing crises over the past decade in the media. These claims suggest that all is very far from well in the housing sector. The adage goes, there’s no smoke without fire!

This is why over the decades past and as I’m a now retired valuation surveyor, I have views on the reasons for these failings, particularly as they adversely affect poorer communities.

Because of this I’ve devised a new and better way to deal with the currently unaffordable level of house prices and other housing issues because purchase prices currently being claimed as being ‘affordable’ are clearly not really affordable at all.

Once you take a look into this, it should become crystal clear that it is the poorer buyers whom are propping up house prices for the rest of the home owners.

Why is this so? Because it is they who must borrow the humongous sums of money, by mortgaging the very properties which they need to live in (at extreme levels of borrowing), so that the present very high prices prevailing in a so-called open marketplace may be maintained. Who effectively gains the most from this?

It is primarily those fortunate enough to already have substantial property assets who enjoy a healthy and almost guaranteed rise in the capital values of their relatively extensive holdings. Secondly it is the banks and financial organisations which gain from earning interest on the substantial loans they arrange. The profits all depend on the ability for both sides of this equation to be able to recoup large financial rewards each time these assets sell, without having to do much to earn such profitable gains.

Borrowers today by comparison, have increasing job insecurity issues, especially borrowers on the lower rungs of the property ladder who have to commit to high mortgages by taking on burdensome, risky and long-term borrowings. These families and individuals are the ones who need relief, by way of a lessening of their large and onerous borrowing commitments.

It is time the whole screwed-up house-selling regime being played out by the historic role of estate agency is re-balanced, such that those wishing to make money from owning property are seen as causing the excessive un-affordability issues experienced by an increasing number of aspiring but poorer home owners in this country.
Is there a political party in the land that might contemplate such a re-think? It seems the jury is still out on that one!

Those needing housing require an efficient and fully functional housing marketplace for people wishing to move house so as to reasonably afford to buy, or alternatively rent, their next housing accommodation.

Judging by the slowdown of sales transactions shown in the recent sales completion statistics earlier in the year, efficient services such as these are simply not available at present.

For anyone interested in the best and only way to correct this unacceptable shortcoming, please read / study the proposals I am tabling within: The House Price Virtuoso Solution.
The specific page covering The House Price Virtuoso Solution is at:

The House Price Virtuoso Solution

The background leading to this logically deduced conclusion is available on the whole web site:

Home Page – improvethehousingmarket.co.uk

I would be happy to engage in online discussions about the technicalities and/or the necessary strategies needed in order to reach the conclusions set out. How, precisely, local housing markets within the whole of England and Wales may be improved for the benefit of owner-occupiers, private tenants, and everyone using all forms of housing right across our Country is fully set out there.

Posted by: Peter Hendry, Housing Valuation Consultant
Author:– The House Price Virtuoso Solution
Copyright © 2019.

How best to provide rented social housing accommodation for those currently needing it

Instead of building more rented social housing in high concentrations on housing estates we should build these as integral parts of all the new-build communities that we construct.

Those renting socially-provided housing would then be seen as a part of society and could be taken into the bosom of that society.

If the Country actually does need as much as 100,000 extra houses per year for the social rental sector, as has recently been claimed, it would be essential, both from a planning viewpoint and a society one, that those whom are dwelling in them should be located within our communities and not sectioned off as if to be marginalised on separate and distinct estates as occurred in post-war Britain. Otherwise, doing that would tend to attract what is bad about those requiring such help instead of helping them to be fully fledged members of a truly modern society.

The cost of integrating this social rental sector in the next new housing estates to be constructed would, most likely, be less in financial terms than if building complete estates of social housing, as used to happen.

However, the key thing should be to manage the social housing part separately from the present arrangements for private landlords, who let property to those wishing to rent privately.
Unlike privately rented housing, rent-levels for social housing should be set and collected by councils and/or housing associations and not by private landlords.
It ought to be expected that rent-levels set by social housing associations should, over time, influence the rent-levels being set in the private sector and this would be another advantage to having such properties spread out within the whole of the housing provision, across Britain.

More private investment in supplying housing accommodation to rent must be encouraged and so ‘Right to Buy’ options for all these tenants would be unsuitable because the housing market now depends upon the supply of this form of housing if sufficient accommodation is to be provided for residential tenants requiring accommodation for themselves and their families.

It is likely that if the ‘Right to Buy’ strategy was applied to these, large swaths of privately rented housing (if not sold to tenants), would simply be withdrawn by the owners and disappear overnight. This would leave a serious supply shortage for those currently unable to buy houses outright or to qualify for social housing.

I would argue that anyone who thinks otherwise doesn’t fully understand the complexities of the housing marketplace operating in Britain today. Whilst I can see why an argument in favour of this could be made, I would be happy to debate this to see which proposal is best. What is required instead is a way to re-evaluate house prices such that actual affordability is properly taken into account. There is only one way in which that could be achieved.

For full information about what it is that I am advocating ought to be done instead, please see:

The House Price Virtuoso Solution.

Posted by: Peter Hendry, Housing Valuation Consultant
Author:– The House Price Virtuoso Solution
Copyright © 2019.

The best way to improve the Housing Markets in England and Wales.

Resolving rental and buy price problems right across England and Wales

As far as building an estimated 100,000 or more new houses each year for social housing to rent is concerned, there are perceivable downsides to throwing money into this. This is a laudable policy of The Labour Party currently but for the reasons I am about to argue, it would be a difficult one to put into practical effect quickly. I would naturally welcome their spokesperson’s thoughts on this counterargument for further discussion however.

In the Thatcher era, it was generally understood that the existing council estates around Britain were tending to degenerate towards becoming urban ghettos or concentrations with poorer class-distinctions and lesser prospects and opportunities being available to those from within them.

In the 70’s the then Conservative government, as well as simply selling off individual council houses to newly aspiring home-owner residents (by using ‘Right To Buy’ as it became known), knew that the twin effect would be to slowly start to break up the localised concentration of social housing for rent.

It may now clearly be seen that to have allowed the capital raised from these sales to be used to build more council estates would simply have recreated the original societal problem once again.
A more creative solution would be needed and whilst no such solution was forthcoming at the time, it was understandably more prudent simply to sit on the cash raised instead.

The question was (and still is) if upwards of 100,000 new houses were to be needed for social rent all around Britain each year and for a decade or more to come, how could that be achieved without creating places tending towards becoming urban ghettos once again?

The only answer surfacing right now is to turn the problem of housing these families over to more private landlords.

In the process of bringing private investors into the business of managing both single and multiple tenancies in locations across the whole country, it soon became clear that this could only be achieved if the tenants under this model were given practically no security of tenure. Without that, the private landlords simply would not invest. The Assured Shorthold Tenancy was conceived.

The result has been quite a success from the point of view of actually housing lots of people and families in large numbers of locations across the whole country.
It is also clear that the reduction in concentrations of people living in social housing estates has had a number of advantages and the mix of council and privately owned houses brings a worthwhile added variation.

The question still remains however – what is the best forward?

Attempts have been made to force the developers of new housing estates to incorporate a proportion of low cost housing within all new developments but this has not turned out to be a great success but the provision rate of such affordable houses has dwindled recently.

If we look at the available evidence critically, some exciting new options start becoming clear.
First though, we need to rule out the options that won’t work. For example:

  1. As explained above, building more large scale social housing estates would not solve the societal problems resulting from doing that.
  2. Giving tenants of the private landlords more security of tenure, would alienate the private investors whom are risking their capital by providing housing for those people in their need.
  3. Rents over the past decade or so have increased beyond expected levels, partly owing to the degree of scarcity of available houses to rent.

So, what we are left with is there’s one thing and only one thing to be done.

It is restricting the degree of profit which may be made by private landlords and when seriously considered, this must be the best way forward. To do this effectively however would require a big, bold and extensive new set of policies and agency regulations to be set up by a truly responsible government.

To a smaller extent this may be partly achieved by forcing landlords to properly maintain the structure of their let properties in fully satisfactory condition. This is already now happening but that is not the final answer..

The main way of restricting the degree of profit which may be made, both by private landlords and by owner occupiers too, would be to bring in such new regulatory methods for the marketing, purchasing and renting of residential property using the procedures proposed under The House Price Virtuoso Solution already set out elsewhere in these pages.

For all the details about what this is and how it could inexpensively be fully and quickly implemented throughout England and Wales, please go to the main page covering this:

The House Price Virtuoso Solution.

Posted by: Peter Hendry, Housing Valuation Consultant
Author:– The House Price Virtuoso Solution
Copyright © 2019.

House-price affordability is absent in UK, except for the wealthy minority

House-price affordability is absent nowadays except for the wealthy minority, unless huge mortgage loans are taken out by everyone else needing to borrow to buy.
This cannot be right or proper.

This problem is running out of control in all regions of Britain. It’s called the un-affordability problem. It affects probably more than half of the house-buying population!

Why is it that those in regular employment on average earnings simply cannot afford adequate housing, whether to rent whilst saving or to buy?

The newspapers have been covering this serious dilemma for many moons now yet the plight of the lack of affordability remains with us.

Is it because those whom have ascended several rungs of the property ladder themselves are the ones making the policy for affordable housing? It does seem that there is a certain credibility to this accusation.

It seems that those in the position of making the big decisions on what to do about this problem have seen that they themselves are benefiting from long term capital value appreciation and low interest rates and so it’s all too easy to let things stay as they are. This is like pulling up the drawbridge and leaving those left outside the castle to be forced to fend for themselves. It leaves those without the ability to save enough to buy even a basic house for themselves, out in the cold.

Not doing much to address this problem is demonstrably not good enough. It is clear from all the statistics which loudly speak for themselves.
Not dealing with the house affordability issue is leaving those without enough capital practically defenceless.

Unless somebody ‘up the ladder’ so to speak, flags this problem in a stark and prominent way, the drawbridge mongers are going to get a way with their shoddy tactics.

Having spent my whole career in housing and property related matters I have crafted, using my valuable experience, the primary solution to this dilemma and published it online.

Policymakers have been writing in the press. They have had innumerable meetings.
Policymakers have been on television but the house-price problem continues.

The answers are not in reducing interest rates, nor in mass producing hundreds and thousands of more un-affordable houses. it’s not by providing 50% shared-ownership schemes, it’s not indeed by advancing near 100% mortgages, extending the repayment period beyond 25 years, reducing stamp duty or, indeed, offering extra help to first-time buyers to be able to borrow enough to bridge the gap in their finances.

The one common denominator to all these clearly failed policies is that they do not resolve un-affordability vis-à-vis the house-price crisis. House prices themselves have stayed un-affordable to most middle incomers and especially to first time buyers.
Let’s hope soon there is a meeting of minds on how this vital issue may at last be resolved. It must be resolved for the sake of the post-brexit evolution of our economy across the whole country.

There is a positive and pragmatic way to deal with this crisis.

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

The House Price Virtuoso Solution.

Recent Links:
The bank of mum and dad is one of UK’s biggest mortgage lenders
L&G’s research, based on a poll of 1,600 parents
The BBC

A million more youngsters to live with parents, says Aviva
By Brian Milligan
Personal Finance reporter
The BBC

Posted by: Peter Hendry, Housing Valuation Consultant
Author:– The House Price Virtuoso Solution
Copyright © 2019.

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

Here are a few pointers to a better understanding 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.

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
Author:– The House Price Virtuoso Solution
Copyright © 2019.

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
Author:– The House Price Virtuoso Solution
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