Aug 302013
 

The housing market recovery has come “too late” for many estate agents, according to accountants, as recent figures showed insolvencies have risen 57pc in the year to the end of June.

WHY?
Let’s cut to the chase about house prices and the way houses should be bought and sold; without further delay?

Here’s the dilemma. If we leave the way things work in the housing market as they are, what will continue to happen is estate agents will try more and more desperately hard to get the best possible price for their clients (and so stay instructed) in what is indisputably a difficult market - with money still extremely hard to chase for.

What usually happens is ‘For Sale’ notices stay up a long-long time, until somebody with enough money and a great desire for the house in question decides to sign up and pay up.

That’s all fine and dandy provided there’s someone out there who is prepared to make that leap of faith for the particular house being sold.

The downside is, this can take a long time and may well result in hard negotiating with the prospect of downwards serial price adjustments before contracts ultimately exchange. Selling to move up (or indeed down) the chain is doubly troublesome as a result.

Anyone buying under these criteria will clearly have to be expecting to stay for the medium/long term at their next house because they will know there will be no easy sale, should that be needed, for some while to come. They are effectively buying into a future market, betting on the likelihood that prices will eventually go up further.

Our alternative strategy, on the other hand, is to trade on the gains available from selling at slightly more attractive prices.

The idea is that if properties start changing hands more quickly and more frequently, the knock-on effect for the whole market would be more sales completions per year and hence more business, more fees and more market activity.

The added bonus would be more speed in selling whenever the day comes for each homeowner to do so.
The result of this would be the market would trade better both in difficult and in buoyant times. Everyone would benefit. There would be no losers.

The only reason why this cannot happen straight away is that agents are continually chasing for more houses to beat the numbers on their competitors’ books!

This is what needs to be changed. I’m proposing that if the Internet was allowed to compete with estate agents equally, everything would start to come right - for everyone, even for agents themselves.

Therefore I support the idea of levelling the playing field for all people to sell either on the Internet direct, with agents (but not with sole agency contracts), or using both ways at the same time.

To summarise, I am claiming here, there would be no losers.

I urge anyone reading this to have faith in these proposals. They, and they alone, can carry the whole housing economy out of the quagmire it is presently in.
They can resolve all the crises involved, including the problem of how to distribute currently available property to those whom need it most.
They can in addition, stimulate the production of new housing development commensurate with the level of demand for it, naturally based on the population in existence at the time.

If anyone has any question about the viability of this plan for marketing houses equitably, we shall be glad to respond with a full explanation of how that particular aspect of the plan would work.

We are therefore happy to explain any aspect of this plan in sufficient detail to satisfy all genuine enquiries about it.

Posted by: Property Match (UK): The modern way to market houses

The present government’s housing stimulus package

 Estate Agents, House Price Valuation  No Responses »
Aug 252013
 

Instead of the present government’s housing stimulus package, involving bigger mortgages for everyone, we should look at things rather more carefully:

We urgently need to get the UK housing market functioning properly by addressing the problem of a cyclical reduction ‘in transaction volumes’, every time there is an economic slump, which is still happening now; lets make no bones about it.  The main problem is that current asking prices simply don’t reflect the true current values of houses at times like these.

It’s not the slump itself that’s causing the substantial decline in transaction volumes, it’s because of an increasing lack of confidence, born from a lack of reliable knowledge about one’s current (and future) buying power.  This is driven by increased ‘uncertainty’ which the slump will have caused.

The inescapable but pertinent fact is; generally the same people still want (and need) the same number of property exchanges across the country in the year following each slump, irrespective of the economic nadir but asking prices make this virtually impossible - except for the Über-rich.

The problem is that asking prices no longer reflect the true economic situation, making it impossible for most families to move.
Even the estate agents have got to feel the pinch as a result of these present and poor marketing methodologies!

The way to resolve the problem is to put systems in place which enable asking prices to adjust quickly enough to closely reflect the reduced (albeit temporary) current wealth within the housing marketplace during a downturn, thus tending to sustain previous levels of throughput, or transaction volumes. This, itself, would be a massive stimulus to the wider economy which could be auto-administered exactly at the right time using our proposed measures.

The way to achieve this is to change the monopoly of estate agency, by removing exclusive selling rights and opening the market to more competition amongst different sales business models. Private advertising, via the Internet, should be allowed to play an active part in making all this happen and the time for facilitating this is now as the Internet has, at long last, come of age.

Our proposal is neutral in terms of regulation and intervention. It simply relaxes the current presumption in favour of estate agents having the monopoly when it comes to selling houses. As I say, the main driving force for the change would be gaining increased prices transparency using the existing Land Registry data which is now open to public access.

We all know there are not enough houses being built to satisfy current or projected future demand.  Policies should of course be adopted to encourage more house building BUT just stimulating price increases is too simplistic a method and won’t achieve the desired result.

Some say that with prices increasing, more builders are likely to want to start building houses.

This is questionable, especially when one realises that profits from building houses depend more on the cost of building them (including labour costs) than on sale prices.  What we want is increased turnover, not just the same (reduced) turnover with higher prices.

As we state, by far the best idea would be to improve the market so that it could properly set its own ‘market’ prices, and in so doing perform more efficiently, as briefly explained above.

Posted by: Property Match (UK): Press Release: Peter Hendry, Consultant in Housing Valuation

Aug 132013
 

So, what about the idea of stoking-up house prices in advance of the next General Election! Would it be a strategically good idea?

Upside:
Electorate feel-good factor (in favour of the current (coalition) government).

Possible increased interest in those thinking of putting houses on the market.

Some say that with prices increasing, more builders are likely to want to get building houses.
This is questionable, especially when one realises that profits from building depend more on the cost of building them (including labour costs) than on sale prices.
As far as builders are concerned, sale price increasing are mostly swallowed up by land price increases plus the inflationary side-effect of prices on the labour and material costs themselves.
The people who gain most from house price increases are those selling land for residential development, (and the majority of these people are not ordinary men and women on the street, as it were)!

Downside:
Over-stimulating asking prices is likely to lead to fewer transactions actually taking place, as fewer people will be able to afford tp pay those prices.

Increased likelihood of those thinking of putting houses on the market holding off, whilst prices continue to climb!

OUR CONCLUSION:
It’s not a good idea in the current, difficult, economic conditions.
A better idea would be to improve the market so that it could set its own ‘market’ prices and perform more effectively.

It might be better to give any stimulus to builders, rather than to stoke up house prices by making loans for buyers cheaper and longer term.

Peter Hendry, Consultant in Housing Valuation at Property Match (UK)