Quite a few mainstream economists may well assume that prices in the housing market are something that can and will sort themselves out; and that intervention is generally an unnecessary evil.
This is understandable, since to intervene in any market is something that no Government or organisation should ever do lightly.
However, the problems that have developed in this market, and which are now all too plain to see in terms of extremes of price movement, need addressing.
To take no action in such circumstances will simply lead to continuing cycles of price hikes followed by slumps in the market, as has now happened for almost 50 years.
Why has this happened?
Its because the agents, (or brokers) who operate this market, are poorly trained - and indeed often completely untrained at being professional go-betweens or brokers.
As a result they act as a psyche on the market skewing it one way or the other in practically every transaction that they negotiate.
The result is that prices become exaggerated either upwards or downwards, depending on whether the economy is expanding or contracting.
A perfect market does not allow such things to continue but this market is. In this way, it has become an imperfect market.
One might argue that it will find its own level, eventually (as markets generally do). Such thinking is correct in essence, but there is a time-lag in operation here. It is this which causes continual and lasting damage.
Because these price imperfections occur on cyclical basis, the damage referred to is always present and always having a negative (or skewing) affect on true market prices.
It is this effect that needs to be counteracted, if the housing market is to function correctly alongside our other leading economic markets.
All that needs to be done to correct the anomaly that I have uncovered, is to train estate agents to do accurate house valuations in place of the pitiful free market appraisals that they currently offer.
My proposals for achieving this are already in the public domain but as might be expected, estate agents up and down the country are very much against accepting the need for these changes.
Debate on this, amongst economists and other specialists therefore needs to happen to bring this problem to the attention of our policymakers.
Once a consensus is reached about what changes are necessary, whatever Government is in power should consider taking radical steps to remedy an open sore in the very side of our Nation’s housing market.
Posted by: Peter Hendry of Property Match (UK): The modern way to market houses