Sep 142011
 

The continued very low interest rates exist essentially because the Exchequer’s levers, for correcting the economy, have frozen. He now appears powerless to do anything about this problem, which is a problem in itself!

This is causing extreme pain for those who have diligently saved throughout their lives, for their old age.

The other effect that continuing low interest rates is having - in the face of rising inflation is, it is putting the housing market into utter turmoil with wildly varying asking prices and such confusion that sales are floundering, just when we all need stability, in this particular marketplace.

What can be done? If low interest rates must continue, the way houses are appraised for sale needs urgently to be tightened up, so that buyers are no longer continually misled by wrong asking prices.

This problem is further compounded by a widening regional discrepancy in asking prices. The increasing gap in actual completed sales prices also seems to be widening across different regions. This obviously causes difficulty for those attempting to move from one area to another.

The author, a retired property valuer, has been aware of these problems in the private housing sector for a considerable time, and it is abundantly clear that very little is being done to resolve them.

The large discrepancies between asking prices of similar types of property, even in the same area must stop. This is resulting in differing sale prices eventually being achieved for such properties, due to market confusion.

If instead, prices quoted on sales particulars more closely matched actual achievable prices for the houses in question, people would be able to see what they could afford to buy and what they could not. More transactions would be achieved as a direct result.

This is the true goal and would get the housing market working smoothly, and remaining stable, in all external economic situations.

This is precisely where the Government should be more proactive. To create a future stable housing market, with a steady number of sales and purchases proceeding to completions, should be its ultimate goal.

It would be perfectly possible to arrange this by changing the way houses are currently evaluated by estate agents.

The outcome may involve a slightly greater fluctuation in actual sold prices depending upon the present economic conditions, but because all the asking prices would be more closely related to one another, less damage to individuals’ budgets would occur.

Moving house, even in difficult economic circumstances, would become possible. This is the holy grail, both for individuals investing their earnings in their houses, and for the increased electoral opportunities for any government offering this.

It would not be difficult to re-train estate agents to do this, instead of perpetually trying to lift prices for their selling clients, whatever the market conditions. (It appears this is all they currently know how to do in order to keep winning new instructions.)

What they should, instead, be doing is providing best advice to their clients on how much to sell their existing properties for; in the the current market conditions. To achieve this they would need to face up to having to charge an upfront fee for providing full advice. Market appraisals would then become proper market appraisals, not just instruction-winning tools.

Everyone would be winners.

Posted by: Property Match (UK)/Asking_Prices: Peter Hendry, Consultant in Housing Valuation

Sep 052011
 

Those who say that the current way in which queues of people are organised prior to embarking passenger planes is just fine are wrong!
A prominent mathematician recently came up with a much improved order, for passengers to embark aeroplanes; thus saving valuable time for everyone in the process. Will anyone actually take him up on his realisation however? Let’s hope so.

It’s not rocket science, it’s just excellently applied mathematical deduction and logic.
My improvements for the housing market are, in essence, similar. It should perhaps be said however, the changes which I am advocating are a little more complex to fully grasp, as they involve market economics and house valuation methods also.

Nevertheless, I shall try to outline these in simple terms, so that the overall concept may be appreciated in essence.

One matter which I hope I may be forgiven for mentioning first of all is the state of our society, as this impinges directly on house transactions. To me, it seems that western democracies in general, which have functioned well for so many years, especially since the last World War; are now showing important stress signs. Housing is just one aspect of the present difficulties.

It seems that the glue that has been holding our society together, which originated from the cohesiveness produced from small communities working in their common interests, is now loosing its cohesiveness and becoming rather aged and brittle.

This is partly owing to the accelerating growth of the size of the UK population. At a certain point this starts to mean that communities no longer function as communities and it seems evident that this point has already now passed. I happen to believe that we are witnessing the slow implosion of western democracy, and what concerns me is this could materially damage the very society we survive within.

The fact that individuals, like me, can no longer even be heard by our elders in Parliament is symptomatic and this is a clear sign that society, as it started out, has devolved into something less - something rather too sinister for many people’s liking.
Another prime example of what I am talking about is the lack of interest in voters voting at General Elections nowadays.

Even if Karl Marx, the revered German philosopher’s prophesies are now playing out, it doesn’t mean that we should do nothing to try and resolve the issues by trying to improve our established and much relied upon capitalist belief system. Why wouldn’t we? It’s in our own best interests after all.

Capitalism is leading to a revolution but not the one that Karl Marx expected. The fiery German thinker hated the bourgeois life and looked instead to communism to destroy it. He predicted that ‘the bourgeois world’ would eventually be destroyed, he thought, by communism; but in fact it is capitalism itself that is now killing off the bourgeoisie.

See a recently publish article by the BBC: The revolution of capitalism

Weirdly (or perhaps logically) this set of arguments actually explains why unregulated estate agency (especially in regard to providing so-called FREE market appraisals) causes a repeating acceleration and then a collapse in the number of houses being bought and sold in this country.

If you think about this however, you will realise that the actual number of people wanting to move house tends to remain the same, whether or not it is difficult to achieve a move. The approximate number is a pretty fixed percentage of the population. Something is therefore very wrong within the private house market, because the difficulties of achieving a sale and purchase get very much worse in repeating cycles.

House asking prices must therefore be having a significant affect on this process.

To dismiss them as merely a product of the market itself is totally misunderstanding the very fundamentals of economics.

By reportedly saying: “The reason why houses became so unaffordable, was a tripling of prices between 1997 and 2007, which put them out of reach for many people”, The Rt Hon. Grant Shapps is conveniently not saying what he really intends to do to bridge the supposed affordability gap in house prices. He’s just stating the obvious; only the other way round?

The next instalment will cover why it is asking prices that are disrupting the smooth-running of the UK housing market.

Posted by: Property Match (UK)/Asking_Prices: Peter Hendry, Consultant in Housing Valuation