Jul 312014
 

Owners thinking that higher prices may be attainable may try to get them, by increasing their asking prices.

If they do this at a time when buyers are biting, they may well succeed. Then, more owners may try (and so might their agents).

When you think about it though, higher ‘asking’ prices themselves can’t be the reason why sold prices have actually increased. There has to be another factor operating.

Similarly, when prices start falling, it’s not because owners start thinking “I am now going to lower my asking price now”, though they may well do so if they are not getting offers and want (or need) to get sold more quickly.

What causes movements in house price levels is the volume of completed sales at any one time.

If volumes are increasing, those in the market to sell tend to sense that an increase in asking price will still result in a sale. If volumes are decreasing, they will tend to want to drop their asking prices instead or they will be ignoring market sentiment.

It is the measure of the ‘volume’ of sales being completed (in each specific location) that determines current house values. Volumes of sales need to be generally at a level commensurate with local demand for the market to be working correctly or efficiently.

For more on understanding the economics of the UK housing market, please Google ‘The Hendry Solution’.

Here, we explain the reasons why owners, combined with their agents, are tending to cause house price spirals followed by corrections on a cyclical basis. More importantly still, we’re proposing the required solution to this.

It would seem that right now, we all need that!

For more information about just how this could be achieved please see The Hendry Solution: -
Earlier article as updated: Full details of our proposals.