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