I blame the agents, for badly misreading housing market dynamics and then gaining easy support by advising the all too hopeful vendors.
The reason for this is that it’s quite a bit more complicated than many agents are currently able (or willing) to appreciate.
The problem is currently being highlighted by the ONS who have just said that the supply of properties for sale nationally is down 12% year on year, and down 48% since March 2008!
There is an explanation for this and it’s not because house-owners don’t want, or need, to move house these days.
The trouble is that estate agents are still desperately trying to annex the whole housing market for their own gains, even though its being increasingly damaged by their own efforts.
By misrepresenting asking prices across the board, and acting only for vendors, they are causing the whole market to contract, just at a time when The Nation needs it to be expanding, from a sales volume point of view.
Unfortunately, no-one in government seems able to take charge or stand up to these agents and their unscrupulous tactics. The housing market has become effectively blackened by the misdeeds of those manipulating it; no-doubt goaded on by eager vendor-clients, who are unaware of the consequences of the tactics being ‘sold’ to them by their agents.
The whole thing is now out of control and right out of phase with the rest of the UK economy. The opportunities for correcting this have been duly missed exactly as the opportunities, which existed before the banking collapse, were available to correct our nation’s financial position.
All that can happen now, is house owners must see an ongoing natural correction in market prices, to bring them more into accord with general economic indicators.
This must happen, irrespective of any tactics employed after the fact by The Treasury.
In a nutshell. the party is over. The restoration of ‘normality’ will soon have to commence happening.
This will begin with many owners, previously hoping to sell for a profit, either giving up on trying to sell, or being forced to sell at very substantially reduced prices.
The naive idea that supply will support such ridiculous price levels simply because it lags behind the rising demand for houses is untenable and cannot withstand any degree of scrutiny. Supply may indeed be short, but without sufficient wealth, there is no economic demand.
A case in point which proved this hypothesis occurred in The Republic of Ireland, where whole estates of newly built houses were left to rot and decay, uninhabited and unloved as a result of the lack of wealth their inhabitants encountered as the Euro crashed. These problems are still working their way through the system over there.
Britain itself is, contrary to the views of some commentators, yet to come out of this unscathed. The fact that money is coming here from a small number of relatively rich investors from abroad is actually confirmation that things are not good. Money from abroad won’t, in itself, be enough to remedy the situation.
There is a solution available, but it’s not something that estate agents up and down the country are likely to support because it means doing more work, it means working harder for their gains.
It’s to do with involving them in negotiating prices at both sides of each property bargain, not just trying to get the best price for the vendor.
The building of more houses is undoubtedly essential to help quell rising prices and it is a silver bullet worth using. However, the above remedy would be the golden bullet, as it can permanently bring house prices back within reasonably affordable levels.
For full details of how our proposals could be put into effect, please go to an article on our blog entitled:
We want a functional, stable housing market.
Posted by: Peter Hendry, Consultant in Housing Valuation at Property Match (UK)