It is plain to see that house prices have been running away with themselves especially in London and the South East and more recently, across the whole country. It is equally clear that an increasing number of people wishing to buy a home for themselves simply cannot afford the current prices being achieved. A crisis is looming and the warning signs of this happening have been apparent for a considerable time.
This is partly as a result of our present government’s monetary policy which is allowing huge sums of capital in, from wealthy overseas investors, to utilise the relatively safe-haven of UK land and buildings investments - including residential property. This is damaging the purchasing power of local employees, most of whom have far lower earning potential.
However, the cause is the housing market itself, which is dysfunctional, and not just the present government’s monetary policy bearing upon it. The market’s dysfunction is allowing prices continually to outstrip local resident’s earnings.
This in turn obviously damages our economy. Therefore, appropriate intervention to help the market to operate more in synchronisation with the rest of the UK economy is overdue. It is a responsibility of government to intervene to correct this but unfortunately to date this has not happened - for fairly obvious reasons we would suggest.
What is needed is a way to give ‘all buyers’ more leverage when trying to buy. Ways that can enable them to negotiate harder and more successfully when prices are starting to exceed average local buying power.
If, instead of house sellers instructing estate agents to try and sell whatever they have at the best possible price, estate agents began offering a new service involving them becoming agents to both find their client’s next property and get the best price for them on their existing house, the market would begin to self-correct. This would work by getting each moving family to engage one single estate agent to ‘find’ their next house, negotiate the best terms AND sell their present house too. This straightforward adaptation would have a profound and beneficial effect on the UK housing market, as well as improving the find-rate for individual movers.
By having buying agents, parity between what one pays and what one should get for one’s existing house would start to be properly established, thus improving the number of successful moves, or house sales in general. (Gazumping could also be practically eliminated in this way.)
It would also help promote the use of good and objective house buyer’s surveys, as the new agent would have a more acute interest in helping the buyer to know what they are buying - instead of just trying to get the best price irrespective of current condition, which is all that the existing vendor-based estate agents really do.
The whole business of what agents should and should not do on behalf of their clients, as well as what they should and should not charge for, whom they should charge (and precisely when), is in urgent need of clarification by a revision to the Acts concerning estate agents.
The only way in which these things can be properly clarified would be for the government to modernise the law concerning estate agents.
Also with the advent of new, more efficient ways of marketing property, by using the Internet, the need for change has now become a matter of even higher priority.
For more relating to this problem and how it should be overcome, please see our earlier article:
Earlier article as updated: Full details of our proposals.
This will be updated and commented upon as soon as possible after the Chancellor of the Exchequer broadcasts his upcoming 2014 Autumn Statement.