My view is that house prices are seriously over-cooked and should not have risen at all since the banking crisis unfolded. This view is based upon the ratio between average earnings and average house prices.

Yes, there is a shortage of accommodation as housing is a scarce resource, but if the prices were currently correct, we would see a far greater turnover of sales than we currently are.

The market stalling in this way clearly indicates that the prices being quoted by agents are out of kilter with true open market prices. A house price correction is, unfortunately, therefore needed to restore the proper operation of the market (and indeed the very livelihood of the many estate agents that manage this market).

Its time all the agents saw sense and woke up to reality.

Editor’s reply:
Whilst the Halifax may have reported a slight increase of prices, achieved in July, this is not seen as a trend if you look at the prices graph over the past two years.

My view is that house prices are seriously over-cooked and should not have risen at all since the banking crisis unfolded. This view is based upon the ratio between average earnings and average house prices.

Yes, there is a shortage of accommodation as housing is a scarce resource, but if the prices were currently correct, we would see a far greater turnover of sales than we currently are.

The market stalling in this way, clearly indicates that the prices being quoted by agents are out of kilter with true open market prices. A house price correction is, unfortunately, therefore needed to restore the proper operation of the market (and indeed the very livelihood of the many estate agents that manage this market).

Its time all the agents saw sense and woke up to reality.

Estate agents are likely to lead us back to a ‘boom and crash’ scenario unless they fundamentally re-assess the way they conduct their business.

The Royal Institution of Chartered Surveyors (Rics) points out that prices have been squeezed higher by a small pick-up in demand from buyers, combined with a lack of supply of homes to buy.

“There is a reluctance on the part of many vendors to put their properties on the market,” says Simon Rubinsohn, chief economist at Rics.

“We are not wholly surprised. Our own survey has shown new instructions have fallen month on month, and the rise in new buyer enquiries we saw, gave a good steer about the improvement in demand early this year.”

“We think prices will continue to edge up and at the end of the year may be higher than 12 months before, but in 2010, our best guess is prices will not go up further or may even slip back,” Mr Rubinsohn adds.”

Many economic commentators would seem to agree with this view, including Ed Stansfield from the economic consultancy Capital Economics and Jonathan Davis, of Armstrong Davis. Such people are, in effect, saying that the prospect of increasing house prices, in the current economy, is fiction and any such dream, will end in tears.

The recession is still in full spate and unemployment is going to continue rising for some time.

For more info see:
http://news.bbc.co.uk/1/hi/business/8181945.stm

http://news.bbc.co.uk/1/hi/talking_point/8191283.stm

In England there is a lot of distrust associated with the activities of estate agents. Also there are such large swings in house prices, primarily because estate agents don’t actually value them. Instead they compete with each other for the instructions to sell each house!
Regulation is minimal!

Why is it that house-builders can get instant and accurate valuations on property which is to be taken in exchange for the sale of new houses but estate agents can’t give exactly the same advice to ordinary house owners wishing to sell?

If they could, that would get the market operating again.

The Government needs to act now if there is to be any hope of stabilizing the housing market before the next general election. The initiative could easily be taken.

The trouble is the logic of the argument is almost certainly too subtle for the average vendor to sus and without Government intervention, the odds are in favour of estate agents holding onto their monopoly and the ability to force the market in whichever way suits them; as has been done for such a long time now.

They simply depend upon no-one rocking the boat.