The Cure For Malaise across All British Housing Markets

The cure for malaise across British housing markets is to use a combination of two cures, in a similar way to a doctor using two specific antibiotics to cure a pernicious illness or disease.

The expertise required to achieve such a thing involves first acquiring a deep and accurate knowledge of the causes and then following this, the ability to diagnose the correct treatment to cure the specific illness.

It is of course imperative to be able understand precisely how and why a specific malaise has occurred. Only then can the correct cure be identified and prescribed.

Peter Hendry says, “I can explain in simple terms why house prices are continuing to rise despite the increasing lack of affordability affecting ever more prospective buyers.”

In a nutshell, the housing market should find the values of houses in a quite specific way.

The true value (or the correct buy price), of any specific house being offered for sale in any (local) housing market should be arrived at by adding THREE separately-assessed components together:

1 The land value – which depends in part upon location.

2: The construction cost (including a profit element to the builder or developer).

3: A further amount of equity or profit, produced as a result of having combined the two.

These are the things that a sensible buyer should theoretically be considering, even if only subliminally.

All too often however, anxious buyers will base their offers on a combination of how much they could possibly afford and borrow, together with knowing the current asking price being quoted.

What makes this task particularly difficult to quantify is that house prices in today’s housing marketplaces are not derived in perfect market conditions at all. The reason for this is because in a perfect marketplace, the whole amount of homes on the market would be sold out and also, all demand for these would be fully and continually satisfied.

Instead, in the present day housing markets, there are large overruns where either there is too much property being offered at any one time or alternatively, there are too few properties being offered for purchase. Bothe extremes are most uncomfortable for all those trading houses in the regional marketplaces.

Unfortunately, current day estate agency does not assess house prices in the way described just now. Instead they peg asking prices at the level they might simply guess they could sell a house for but also they may well often include what their client (the seller) might hope to to achieve when selling!

Worse, they base their asking prices on what other asking prices are, including what other recent sales will have achieved albeit, for the reasons set out, these would have used skewed or imperfect marketing comparisons for the reasons just set out.

To justify what is being explained here, a year ago for example, a typical estate agent had 37 properties available and 379 buyers (according to statistics published by the NAEA). Today, after a spirited first half of the year after COVID has started to reduce, a typical estate agent apparently has just 23 live listings and over 400 applicants on their register, published from the same source.

If such knowledge was to be broadcast widely, it would skew prices-levels downwards whilst the market is flush with properties for sale, or alternatively, it would skew prices-levels upwards when there are not enough houses coming onto the market – as now.

In the former case, sadly there is inherent pressure within estate agency to want to hide the true facts of an excess of properties being listed for sale compared with buyers so as not to spook the market and keep things going as smoothly as possible, rather than face the reality of a downwards-changing market with prices dipping.

In the latter case however, with too few properties on their books and too many buyers wanting them, broadcasting the lack of supply actually helps agents to justify trying for rising prices even against general economic trends! This is more recently what’s been going on of course.

Selling agents may say that it is the desperation of buyers which is forcing the prices up but that does explain the suggestion that the housing markets are operating at low efficiency. They exhibit imperfections, resulting in a lack of stability and so these markets are in need of an introduction of completely new ways to buy and sell houses.

In my analysis and diagnosis, following understanding the true causes of these problems, two specific ways to deal with them have emerged.

A: Firstly a restriction on the right to occupy a proportion of houses in each locality such as permanent “Primary Residence” status should be placed on these. This would mean these would be for use only by local people, such as key workers for example.

Most people seem to agree that each locality absolutely needs housing to be affordable to those fulfilling the essential roles in their community. This should therefore be enshrined in each area’s local planning rules.

Secondly and very importantly:

B: The emphasis on all prices should be changed so that these are set by ‘buyer offers’ rather than seller price-rigging, which is of course not an open market practice if this is carefully scrutinised.

This is where The House Price Virtuoso Solution (formerly described as The Hendry Solution) could come in. It allows for both of the essential changes cited above.

It would do this by re-shaping house sales by better utilising “Primary Residence” restrictions on certain properties.

AND

It would enable buyers to be free to participate by establishing the price levels themselves, still subject of course to “Primary Residence” restrictions, which would be separately and locally established using local planning rules.

To read more about how The House Price Virtuoso Solution (formerly The Hendry Solution) could improve the way in which houses are bought and sold across all local housing markets in the whole country, please click the following link.

The House Price Virtuoso Solution

How to Improve Housing Markets in England and Wales.

Posted by: Peter Hendry, Housing Valuation Consultant

Author:– The House Price Virtuoso Solution

How much would you need to save a month to buy a house within 10 years?

Well in theory right now, if you were to make contributions of £200 a month into a stocks and shares Isa, (i.e. put aside earnings of £2,400 p.a.) and aimed for a realistic yearly return of 4pc after fees, you’d reach your goal of £40,000 in nine years.
If your partner did the same, this could be £80,000.

In addition, if house prices were to fall over the same period, you could suddenly find yourself well poised and ready to buy a comfortable place to start owner occupation in.
Unfortunately, there are quite a few ‘ifs’ in this scenario right now!

The main obstacle to achieving this is house prices themselves which, even at the lower end of the house-ownership spectrum, are out of reach for a large number of hopeful owner occupiers. This obstacle could however be removed using relatively straightforward improvements in the way that residential properties are marketed.

The present ‘government’ idea of trying to get prices to reduce is by building many more housing units.
Unfortunately, this idea is fundamentally flawed. The reason is that the effect of doing it would be marginal on price. Why?
Because unless upwards of 10% of the total number of currently built homes were to be constructed, little or no effect on house-prices themselves would be felt.

If you do the maths it becomes clear that it would be impossible to build enough, even over a full ten-year stretch. You would be talking about building in excess of ten times the number of new units currently being built each and every year for at least the next ten years!

By deduction, instead of attempting to do the impossible it would be better to look at the current methods of marketing all residential properties and change that. This is the one thing that is highly inefficient, old fashioned and in need of wholesale improvement. It is the key to achieving the desired result – greater owner-occupation.

This is the key. Reform the way privately owned residential properties or houses are bought and sold by making the process open, fair, and efficient.

Doing this would bring the prices of starter homes back within the reach of first-time buyers and they would no longer have to borrow the eye-watering amounts currently stopping the majority of those whom wish to become owner-occupiers.

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

The House Price Virtuoso Solution (otherwise known as The Hendry Solution)

Full details of our proposals for properly reforming all housing markets in England and Wales.

Posted by: Peter Hendry, Housing Valuation Consultant.
Author of:– 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.

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

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