What’s Going Wrong With The UK Housing Market?

The house-price crisis is continuing, resulting in prices far outstripping average buyers’ resources. Uniquely, I believe that the only way to restore market activity and establish satisfactory sales volumes again, would be for the estate agents themselves to change their methods and become like ‘finder consultants’. Compare them, for a moment, with employment agents that help people to find their next jobs - and then try and think of them as agents finding people their next houses instead.

What I’m saying is that simply trying to obtain the best price on behalf of each client selling their house is in fact less than half the battle, or is less than half the service people actually require from estate agents - in the modern world. New government directives are now clearly required involving re-organising estate agency to resolve the house price problem - just having a policy to build more houses simply won’t resolve this and will take far too long anyway.

The real reason for the problem is the lack of professional guidance to buyers in a difficult housing market. The resultant confusion leads to an unrealistic stoking up of ‘asking prices’, the result of which is the slowing of sales volumes.

Right now actual completed sales volumes are lower than they’ve ever been and prices are at their highest! This clearly shows there is a fundamental problem in the workings of the UK housing market and no-one can dispute this.

It’s not simply about a shortage of built properties in the housing market. It is instead about the shortage of actual sales - owing to asking prices being pegged at excessive levels, based on the shortage of actual sales! Those in the house-marketing industry are misleading themselves by thinking that a shortage of houses coming onto the market means that asking prices should rise! This is wrong economic theory.

New laws allowing more competition with traditional estate agency are desperately needed. The case for this is well documented but the newly elected government appears to be turning a blind eye to this currently.

The Conservative Party promised in their manifesto, during the last but one general election, to examine the feasibility of enabling new online services to compete alongside traditional estate agents but they have since deferred any decision on this.

If government were to take the described action to stabilise the UK housing market by setting up new ways to facilitate the equalising of buy and sell prices, that would enable the housing market to perform far more efficiently than it currently does.

Unfortunately, unless the correct action is taken, the housing market will just continue to lurch from boom to bust and back to boom again:- broadly in cycles in line with the year dates of successive General Elections!

Whilst this situation continues, we feel sorry for the house-buying/owning public because they have no alternative but to try and cope with what can only be described as a highly unsatisfactory market situation.

For more information on the only way to deal successfully with the current housing market problems, including helping countless numbers of households to have a better life, please refer to the previously written “Hendry Solution”.

Earlier article published on this blog site. This gives full details of our proposals for resolving the price inefficiencies within the UK housing market.

Posted by: Peter Hendry, Consultant in Housing Valuation

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