Lets assume that most people would put, having a roof over their heads the whole year round as being a high priority.
Also, for the time being, lets ignore the concept of an excess of ‘demand’ over supply; but feed this into the model once we have built it.

The value of something people need; depends not on the thing itself but on the ability of someone who wants it, to buy it (or pay for it).

Rents therefore depend upon the ability of those individuals wishing to rent somewhere, to pay the amount of rent they plan to tender.
The most wealthy amongst such people are likely to be private individuals, working and earning their livings.
These people bid the most for rental accommodation and, assuming no significant excess of demand over supply, they will merely bid a sufficient amount of money to set the tone of rents generally achievable – dependent upon their earning potential (whilst also allowing themselves enough to live on, save, have certain luxuries etc.).

However, once rental property becomes more scarce and there is an excess of demand over supply, prospective tenants will begin increasing the amount they bid until in the end they may only have just enough both to rent a house and buy essentials.
The amount of rent which is established in this way is the current rental value.

How does Housing Benefit work alongside this model?
It enables those who cannot manage to pay the current market rent, but can demonstrate appropriate need, to nevertheless secure a house to rent.
The amount of housing benefit, or its equivalent for young working parents, is normally calculated to allow people on low incomes to bid alongside the more wealthy earners and to secure a house to rent, on similar terms to those of the more wealthy earner.
If an excess of demand over supply happens in a particular district, rents rise further as just explained. Usually housing benefit in these areas rises to balance, so that poorer families can still secure private rented housing in those locations. The Rent Officer is normally involved in advising what current rents are in that particular area or location.

Looking at this, one can see that if housing benefits were arbitrarily cut, the outcome would be that poorer families would no longer be able to compete with the wealthier ones.
Rents themselves would not be materially affected, assuming the large majority (I suggest above 75%) of tenants are privately funded from their own earnings and do no claim housing benefit, or its equivalent, in the areas concerned.
The conclusion here is that if housing benefits no longer tracked rental values, those in need would no longer be able to find accommodation in the market.
The losers would be the less well of families and no-one else would suffer materially as a result.
This should be deemed unjust, though this view may depend upon one’s political stance.

How about the ‘capital’ value of houses. What actually creates these?
There is an important difference between the two types of good, i.e. houses to rent and houses to buy, and it is this: -

Again if we initially take out scarcity or a local demand excess over supply, and feed this into the model once we have built it, it is possible to get a glimpse of the way this markets functions.

Capital values of houses, like rental values, arise dependent upon the earning power of those in the locality.

House values, like rental values, reach a level, or tone, but dependent upon these underlying economic fundamentals.
They are derived from both earnings and the ability to save (or to otherwise accumulate) some capital wealth above that required to advance at least the 25% deposit which is generally required.

This would include, inter alia, accumulation of wealth from such sources as legacies, etc. Those with reserves of capital may well choose to bid prices up, where they particularly like certain property and locations.

However, the real problem with capital values comes when sales are driven by excessively hyperactive sales techniques.
Such techniques result in house prices becoming progressively over-priced compared to their true current market values and the cycles of booms followed by slumps, which we have all seen, then begin to occur. They seem to occur at between 7 and 10 yearly intervals and are the product of what are, effectively, totally unregulated sales techniques.

The fact that buyers have dwindled in numbers significantly over recent months whilst prices have rebounded almost back to peak levels, suggests all is not well and confusion abounds.

But how can over exuberant sales techniques possibly have such a marked affect on a market as big as the UK housing market? One might well ask.
The answer is, it happens because of a lack of perfect knowledge by the majority of buyers, at the time of purchase (with surplus capital at their disposal).
Unfortunately imperfect knowledge has been, and still is widespread. Buyers hardly ever know the true current value of houses in their locality. They generally rely upon whatever information is available via (yes, you guessed it) the same estate agents that are promoting the excessively hyperactive selling techniques.

The result is incrementally over-priced houses, which only the richest of people can afford, coupled with price-spikes followed by slumps. These occur slightly out of sync with the National economy and thus inflict particularly significant damage to it.

In this way, excessive house prices cause compound damage to the National economy as we have recently experienced.
New methods urgently need to be devised, to ensure that house prices stay close to the true market level; which is a tone in harmony with the underlying economic fundamentals at play.
A full review of current market appraisals and formal valuations needs to be put in hand as a matter of urgency.

One thing to add here is that there is, and always should be, a close relationship between capital values and rental values. Capital values are, by definition, dependent upon rental values.
There is a direct link between rental values and resultant capital ‘values’. This is similar to the price-earnings ratio in stocks and shares.
Currently the favoured ratio is about 15 times the net income for residential property.

If you apply this multiplier to many houses currently for sale you soon get a pretty clear indication of just how far extended, current sale prices are; as opposed to true market values.

What is clear from this treatise is: The price which estate agents generally try and get using the description ‘best price’ is not, necessarily, the current market value.
For the market to work efficiently these two figures need to be the same. For a definition of market value please go to market value.

TWO OF THE OTHER MAJOR FACTORS WHICH HAVE A BEARING ON THE ABOVE MODEL ARE:

1. Excessive borrowings, driven by relaxed lending criteria.

2. Increased desire to become home owners on account of witnessing the steep house price rises we have all seen in the past. This is conjoined with wrongly thinking that those who are rich, became so, simply by borrowing more and taking more risks – especially with property investments.

A strong desire to join the house-owning elite has tended to develop into a National craving. This occurs once the local and regional demand excesses, fuse into becoming the most prevalent condition and hence become widespread across most regions.

Prices suggested by estate agents for many middle to top end properties have been pitched at extremely bullish levels for some considerable while.

Achieving close to these prices is no doubt good for the vendor, but not necessarily quite so good for buyers, unless those prices should keep moving inextricably upwards.
The other major problem with trying to maintain such high prices is the gaping affordability gap. Only those who are relatively very wealthy will be able to buy such properties.
This leaves first time buyers and middle earners at a distinct disadvantage!

The result, eventually, must be that fewer people will be ability to afford the houses the rich want to move out of. When this becomes the norm rather then the exception, the sellers will have to reduce their prices.
That, in turn will eventually mean they will have less to spend on the bigger and more luxurious houses that they wish to buy. Prices right across the board will then be adversely affected. In the end it must all come back to people’s overall levels of wealth. For sustainability, it can’t simply depend upon the richer sector among the population being able to afford what they would like.

In addition, an excess of local demand over supply is brought about by things like: -
Population growth.
Possible cure: Reduce the number of families needing housing.
Scarcity of certain types of housing locally.
Possible cure: Build more of these houses locally.
Concentrations of greater employment.
Possible cure: Make lending criteria stricter, thus forcing some people to look for work elsewhere.

So to sum up, one can see that whereas rents across the UK are probably in line with expectations based on earnings, capital values by comparison, are seriously over-extended and would need to come down, if house price stability is being aimed for.
Its clear that achieving this would mean acknowledging that a considerable amount of negative equity has been allowed to form over recent years, and devising a strategy to effectively deal with this.

Of course, among those who would argue vehemently against doing anything are banks, building societies, estate agents, and quite a number of rather hopeful house owners.
On the other hand, many more of us would wish, in preference, for stable house prices which remain affordable by the majority and which would result in increased sales on the back of less instability, and an increased demand for new housing itself.

It similar to what happens at the green-grocers. If the price of potatoes goes down, people tend to decide to buy more potatoes. The green-grocer still makes a profit. In fact he may even make more profit, depending upon the amount of turnover. One key thing is; whatever the price, the green-grocer should keep on supplying potatoes. In the same way, estate agents should still keep marketing houses, even if the prices should go down. However, these must be marketed at the correct market price if success is to be achieved.

Providing new (additional) housing is something which is a long-term essential, if stability in the housing market is ever to be maintained.
Measures to help with population stabilisation would also help.
Spreading the amount of work more evenly throughout the country would also help to even out the differentials in house prices.

In the short-term however, control of both lending and marketing criteria are seen as being of paramount importance, if prices are to reflect true present-day affordability for all.

These measures, taken as a whole, are probably not things which the Conservatives, as part of the present government, are likely to wish to sign up to, anytime soon?
We’d be most interested to hear otherwise however.

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

We have seen house prices seesaw over the past couple of years and are likely to see it again now. As a result, buyers have gone to ground in large numbers yet again, giving up on trying to move house, unless they are absolutely desperate. How sad.

I predict a double dip in UK house prices, starting now, and in addition I say “It didn’t need to be this way”. Agents please take note.

This prediction is not on the assumption that a double dip in the whole economy simultaneously occurs. I hope this does not happen and my prediction is on the basis that it won’t.

I suggest that estate agents are the cause of the fluctuating house-price problem, because they are incompetent both at valuing houses and doing genuine market appraisals.

As I’ve resigned my membership as a qualified valuer of 30 years standing in the RICS, I’m in a position to speak out, without fear of censorship.
In my experience, it is possible for the market to be duped by the inappropriate activities of estate agents, working as a group.
Agents simply don’t seem to understand that there’s a big difference between driving a hard bargain (thats called negotiating) and simply ripping people off in order to get a deal, by misrepresenting the facts, either about the house, the current state of the market, or both.
They have been doing the latter recently and now its time they were held to account – in the same way the bankers were supposed to be!?
Both types of professional, operating in these markets, need additional and appropriate regulation by government.
The question is: – does the new government have the capacity to realise this and correct the fault, working on behalf of the ordinary voting public?

The price/earnings ratio is always relevant when determining average house prices and this clearly shows that there is now a big gap opening up between average house prices and average earnings.

The price/borrowing ratio is also relevant when determining individual house prices.
If agents simply base the next asking price they assess on one occasional buyer, who may just have extra cash to invest but an insufficiency of ‘nous’; this is utterly wrong. It skews asking prices too far upwards.
If you think about it this doesn’t result in an increase in the value of houses for everyone else – though estate agents certainly seem to think it does!
There is significantly more ‘art’ to valuation than that, as many people do undoubtedly realise.

Definition of the term – Valuation:
A calculation, based on recent sales information – and adjusted for material differences between the sold property and the subject property (the house still to be sold) – which deduces the true current market value of the subject property at that particular time by using three or more recently sold comparables, none of which involved an excessive amount of credit finance (over 75% of the price required) to effect the sale.

The above reasoning explains why there is a great need for reliable house valuations – something that sadly, no organisation currently offers; even though building societies like to commission these, for their own protection, when making advances.

Definition of Market Value:
The price for which a contract to exchange on a property should occur, at the date of the valuation, between an educated buyer and a reasonably motivated seller, in an arms-length transaction after a proper marketing process has been conducted and where all the parties have acted knowledgeably, prudently, and without undue influence.

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

Background:
The government excludes housing costs from the measurement of inflation because:
The primary tool for regulating inflation is the the interest rate. If they included housing costs, the substantial part of those costs would be interest; which would (in extreme circumstances) cause a spiralling effect (a feedback) – both in an upwards and a downwards direction depending upon whether the interest rate was increasing, or decreasing.
RPI still includes housing costs, as a control indicator. CPI does not and that is why the measurement of inflation uses CPI, which excludes housing costs.

The government views housing costs as being entirely relative to the state of the economy – and prices being entirely the result of current growth or contraction.

Estate agents are the ‘nurses’ (or the worker bees depending on how you view them) that go about making the market happen. The government are therefore happy to acknowledge the job which estate agents do but prefer not to interfere with how they do – it too much!

For these reasons, even if house prices go stupidly high, its unlikely that the government will do anything to regulate this. What a shame this is.

This approach results in disaster in the house market, booms then slumps. Flurries of activity, then nothing.
As the housing market has always been volatile because of this regime, its best to sell at the top of the market, wait; and then buy at the bottom.
Always buy in, at the bottom of the market. Rent somewhere whilst you are waiting for this scenario.
If you’re an existing home-owner, only ever move up the ladder when the market is depressed.

Such a market is so disabled. Should we be putting up with this forever?

You should conclude: No, No, No.

Why?
If you think that the insatiable desire of this country’s middle earning population, (rather than the higher earners), might moderate after they’ve got a reasonable amount of comfort – you’d be wrong.

The thing is, people are never satisfied with whatever they’ve got for long, speaking generally of course. There are a minority who do know otherwise, but these do not influence the large majority; very much.
Politicians need to know and understand these things if they are to stand a chance of making better decisions, than the ones they have made previously.

The conclusion therefore is:
House price increases will not be curbed, merely by letting the market sort itself out; letting it simply find its own level. There needs to be a more hands-on approach by government. An approach that will lead people along the least painful path. Allocating the clearly scarce resource of ‘places to live‘, must use genuine need – as the primary factor, not simply trying to obtain the highest possible price.

The way to do this is to factor in borrowing limits? Yes indeed, however there’s more. Its getting a more inclusive way of marketing houses. Getting agents to adopt a more ‘nurse-like’ attitude to the problem and less of the playing one ‘patient’ off against the other approach – knowing that critical care is needed to find bigger roofs over the heads of growing families. More understanding, yes. More compassion, ultimately.

Instead of being the most hated profession, estate agents should strive, in this way, to become the most loved.
Will they ever? Not without government help in getting them to understand how to get the housing market singing again, at prices most people can actually afford.

This is not just about economics, its about sociology too. Unless you embrace both, none of your arguments are likely to be; valid ones.

Doing nothing is like saying ‘Glastonbury’ will cease to be popular – one day. I don’t think so, no. Not any time soon anyway.
For as long as the full moon rises over the fertile Somerset clays, people who are appreciative of being more connected (come rain or shine) will hope to congregate there; whatever. The quality of the music is almost incidental to the overall scale of such an event, in the peoples’ minds.
To try and deny its relevance, would be a mistake – even if you are The Government.

In the same way, just leaving the housing market to sort itself out, by price alone, will never work – not in this millennium anyway!

Posted by: Peter Hendry: A freelance online blogger, with a passion for anything house-like

The best attitude to borrowing is one that is fiscally conservative, i.e. one that is reactively prudent, in terms of how much you need to borrow; whilst being fully aware of the line of repayment and the level of interest involved in that repayment.



People, advised by agents, are doing themselves irreparable harm by not getting shrewd advice on how much to ask for their properties. Rightmove are correct to highlight this – in the interests of all selling clients.



With the continuing mortgage drought, which by the way is determined by the current wealth of the community, (or rather the lack of it), agents should be properly advising sellers on correct asking prices.



Lets have a valuation hallmark or “Charter mark” for all asking prices. Even rather upmarket estate agents would benefit from being able to show such a ‘Charter mark’ against their prices, certifying them as being carried out to an agreed standard.



It would certainly be a positive point for house adverts, drawing significant extra interest from buyers.

If estate agents were unable to do accurate valuations, companies like Barrett Homes, could not offer a part-exchange service for people buying their new houses.
Since they can do that, this proves that estate agents CAN do accurate house valuations, when entreated to actually do so!



We believe that official government guidelines should be drawn up, for legitimate market appraisals for all estate agents to have to comply with.



We are among those who think this would help, by forcing agents to supply more accurately compiled market appraisals bearing a “Charter mark” which could only be added if the calculation was done in accordance with approved valuation principles.



This way, agents could stimulate the market into reasonable and sustainable activity, so benefiting their clients and the market itself.

If estate agents used this new tool to pitch their asking prices rather closer to the actual price that the market would support, things would instantly improve, the market would cease to be stagnated. To get to do this would require changing the way in which agents do market appraisals.



There should be a “Charter mark” against all properties where the agent thinks they have achieved the approved valuation principles. (No mark against the house price would suggest it has been set entirely, or partly, by the vendor!)

The beauty of the “Charter mark” idea is that the agent gets back into control, by applying the mark if they are happy with the price.

If they are not so happy with the asking price being quoted, and have not given a mark, buyers will know there should be scope to negotiate.

So, with a “Charter mark”, people will know the price should be accurate and without it showing, people will be warned that they should proceed with caution over the price quoted.

Most vendors will therefore want to have the mark displayed against their house and thus will be less likely to interfere with, or try and tweak, the price advised by the agent.

This will help the market, by making the price information thats available, more transparent than it is at present. Right now, bald asking prices give absolutely no clue as to whether they were properly ‘valued’; or not. Such a position is intolerable for buyers and needs urgent government attention.

The ultimate beauty of the “Charter mark” is its versatility. If, for example estate agents, as a group, decided not to take up this versatile tool, to help the house-buying public be better informed about current house prices, other agencies, like those that formerly provided HIPs surveys could.

Definition of the term – Valuation (for residential property):

A calculation, based on recent sales information – and adjusted for material differences between the sold property and the subject property (the house still to be sold) – which deduces the true current market value of the subject property at that particular time by using three or more recently sold comparables, none of which involved an excessive amount of credit finance (over 75% of the price required) to effect the sale.

Another possibility is the RICS could offer this service, so that those agents who trade as Chartered Surveyors could have this option available for their clients and customers.

It seems that the new coalition government may have lost a golden opportunity to provide useful work for those loosing their jobs, as a result of the suspension of mandatory HIPs.

We hope this suggestion gets picked up by the new coalition think tank.

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

People, advised by agents, are doing themselves irreparable harm by not getting shrewd advice on how much to ask for their properties. Rightmove are correct to highlight this – in the interests of all selling clients.

With the continuing mortgage drought, which by the way is determined by the current wealth of the community, (or rather the lack of it), agents should be properly advising sellers on correct asking prices.
Even rather upmarket estate agents would benefit from being able to show a ‘Charter mark’ against their house prices, certifying them as being carried out to an agreed standard.
It would be a positive point for the house advert, drawing significant extra interest from buyers.

Some people think that official government guidelines should be drawn up for legitimate market appraisals for all estate agents to comply with.

We also think it would help if agents supplied more accurately compiled market appraisals, perhaps with a charter mark added for calculation in accordance with approved valuation principles. This way, agents would stimulate the market into reasonable activity, so benefiting their clients and the market itself.

What does Rightmove, or anyone else think about all this?

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

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

One of the main problems facing government in the immediate short-term future is to find a way of keeping the housing market ‘well behaved’ without using interest rates or contributing to inflationary pressures.

How to do this involves asking RICS and the other professional bodies representing the estate agents to use their technical knowledge more resolutely and determinedly to better define current market prices. They definitely have the expertise to practically ‘Hallmark’ individual house valuations, such that virtually all agents would agree the same prices at any one point in time.

This would bring much needed stability to prices and help to curb the prospect of a house-buying frenzy occurring, if lack of confidence should start to materialise – a good insurance policy by any stretch of one’s imagination.

Getting them to be more precise with appraisals and valuations would also have the effect of reducing the current discrepancies between prices quoted by estate agents, and those produced by valuers working on behalf of Building Societies.

Those currently buying and selling would also gain added confidence.

The way to curtail speculative and unwarranted house-price escalation from taking hold is to bring more ‘clarity’, or transparency, to the housing market. The above actions would produce that result.

With more confidence about prices, comes more stability. Stability of prices inside the housing market will allow it to function better and be primed to avoid a movement towards the extremes of boom and slump, which we have seen happening in the recent past.

The following methodology, which the RICS is already well aware of, would still allow those producing market appraisals and mortgage valuations to chart the natural increases (or decreases) pointed out by the market.

In essence it allows the market more freedom to function more in accordance with the purchasing power of the majority and for it to be less dependent upon the ‘being rich is everything’ syndrome.

This does involve changing the model used by estate agents from that of getting the best possible price for the seller (as at present) to getting offers based on the current market value, on behalf of the seller.

The subtle change described would still allow agents to take genuine offers above the asking price, where an individual property draws special interest, at any one particular point in time; so they would in effect still be getting ‘best price’ for the client. The main difference would be, how they should go about doing that.

Here’s a draft of the differing methodologies currently being used by the estate agents, acting for vendors, and the surveyors working and for the lending institutions. It explains, in brief, what needs to be done to bring the two groups to a consensus and thus, the above-described changes into effect.

Valuation Resume:
First of all, agents need to gain an understanding of what Market Value is. Accurate pricing to market value is the key to maximum market exposure and, ultimately, a satisfactory sale.
Accurate pricing has a significant impact on the sale of a property. Properties priced within the ‘market range’ generate more viewings and offers, and sell in a shorter period of time.

Market value is defined as:
The price for which a contract to exchange on a property should occur, at the date of the valuation, between an educated buyer and a reasonably motivated seller, in an arms-length transaction after a proper marketing process has been conducted and where all the parties have acted knowledgeably, prudently, and without undue influence.
 
The current, and accepted, way to get a clear idea of what “market value” might be, is to look at what ’similar properties’ have actually sold for in the very recent past and then to adjust for any specific property and for market differences, between that house, and the one to be sold. This is what professional valuers do.
Remember, a good valuer is like a detective in that s/he’s job is to find out, in detail, what has been going on recently!

By comparison, an estate agent’s appraisal valuation is really just a feeling, using their local knowledge, about how much such a property might sell for, during the next 3 months or so. Its therefore NOT a proper valuation and could actually mislead people if taken at face value.

As explained, professional valuers do market appraisals, or valuations, by using comparison-sales and there is no reason why estate agents doing market appraisals, should not do the same. This information is now publicly available online, so even a vendor can now do exactly the same thing themselves.

People therefore no longer need the current-day estate agent’s market appraisal, which is outdated and usually incorrect. What they need is a more accurate replacement.

This involves looking online e.g. on our comparables page: to find the recently completed sales, near to the subject property’s location. This information is distributed freely by The Land Registry.

The appraiser should then do a like-for-like comparison by giving plus and minus values to the sold property price, depending upon the advantages and disadvantages (or differences) between the sold house and the subject house. The appraiser should estimate the amount that a buyer might pay, for each plus and minus respectively, and adjust the price that was achieved by the sold house. This is done upwards or downwards as may be appropriate.

The appraiser should do this for at least 3 separate comparison sales.

They should also ascertain whether each comparison sale analysed, involved a loan of more then 75% of the purchase price. If it did, they should ignore that transaction completely and look for others that did not use excessive loan finance.
These are the only ones to be used in the comparison calculation, or market valuation.

The result is the price to be currently asked for the house being sold.
(If there is a range of results the appraiser should take the middle, or median, price as the asking price.)

Unfortunately, estate agents simply do not do these things. They simply guess a figure and then try and make it sound feasible. The result:- booms followed by slumps in house prices on a cyclical basis; running out of sync with the main economy and causing incalculable damage to it.

Therefore, the way estate agents currently do business urgently needs attention.

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

ADDENDUM:
1. The statistics for the number of houses placed on the market, compared with the number of completed sales, clearly show an excessive number of abortive attempts to sell. HIPs purchases and Land Registry completions can be used to ascertain this stat. over the past two years.
This suggests that too many house-sellers are finding it impossible to sell at the prices suggested by their agents.

Phil Lavelle of BBC News, confirms this in his report a short while before HIPs were officially suspended:
“30% of all home sales fall through before they reach completion date.”

This is a severe indictment of the methods used in the house-selling market which is currently being operated, almost exclusively, by estate agents.
We are told sellers paid for more than 1.1million packs in the year prior to their suspension yet only 650,000 homes were actually sold!


Nearly half a million (hundreds of thousands) of home owners must have been left with HIPs – but no sale.
Its an indictment of estate agents’ efficiency. So many instructions obtained, so few completions?
What, exactly, is being done about that – by anyone? Anyone can help to provide answers to this online.

2. The final confirmation of validity, of these arguments, is in the RPI graph (which includes housing costs),
Url: Link to BBC RPI graph
This graph clearly shows the over-optimistic track taken by house prices over the past two years.
The future likelihood is that it will level out, once again.

Our contention is that if the graph had taken a less extreme trajectory (i.e. going from bust to boom and back again) things would have been a lot better, for a lot more of those trying to move house recently. To achieve this, government needs to involve itself in requiring estate agents to produce better and more precise market appraisals, when competing to take on new instructions.

Better appraisals would reduce the fear-factor, amongst those trying to move house. This would result in an increase in successful transactions.
Looking back in history, a similar thing happened with deals going bad in the selling of gold and other precious metals (they turned out not to be of the quality initially alleged by vendors!). The result:- a law to ensure that all precious metals must be hallmarked before being offered for sale in the UK.

We strongly believe a similar system should be introduced to guarantee the quality of a market appraisal, offered by anyone in business to sell houses and this should include estate agents.

The past few years have clearly shown that macro-prudential regulation of the housing market to help retain price stability was, in fact, needed. Simply regulating the availability of finance or mortgage loans is insufficient. New regulation can only be implemented by the government.
The last government failed us on this account, in our view.

Who else agrees with us please? Does anyone disagree?

To be specific, I think there’s a strategy between Government and estate agents where the government is unwilling to discourage agents (or vendors) from stoking up house prices beyond current market sustainability because they want future growth in the economy (at least on paper).

Its high time a different approach was taken because this is about to damage the economy severely, and this problem has been accumulating for years.

If the housing sector is ever to become an integral part of the mainline UK economy, there now has to be a root and branch change in the way house valuations are initially carried out, including the means by which sales transactions may be more swiftly achieved. Efficiency and transparency in this sector of the marketplace need to be brought in.

If these changes are not made, the status quo will simply continue, i.e. booms followed by slumps in house prices on a cyclical basis; running out of sync with the main economy and causing incalculable damage to it.

With the new Con-Lib coalition we probably have, for the first time ever, a clear choice whether to embrace necessary change in the way houses are marketed; or not.
In my view, it is time we embraced change, which is so urgently needed, that all our futures depend upon us doing it.

For the time-being, its buyers beware – be very aware. There’s a huge rift opening again between asking prices and mortgage surveyor’s franking valuations.

Anyone who fails to realise this is likely to loose money on the houses they may buy now, as there will be a price correction yet again, later.

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

If these changes are not made, the status quo will simply continue, i.e. booms followed by slumps in house prices on a cyclical basis; running out of sync with the main economy and causing incalculable damage to it.

We now have the choice, whether or not to embrace such change.

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

One aspect of this is there are approximately 10,000 people with jobs in HIPs, and some of these are likely to be Coalition supporters. Shouldn’t they be represented?
I asked that the matter be debated in the house before any firm decision was taken to scrap HIPs.

Kirstie Allsopp the co-presenter of Location, Location, Location is on camera recently as saying that she in angered enormously, because the length of time it takes to go from offer to exchange of contracts, whilst buying a house in England and Wales, is now longer than it was 20 years ago!

What I am saying is, correctly compiled HIPs were designed to significantly reduce the time it takes to achieve this.
I believe the new Housing Minister, Grant Shapps, who apparently consulted with Kirstie Allsopp before deciding to make scrapping HIPs a campaigning issue, ought to consider the other side of this particular coin before going through with anything like that.

My proposal is that instead of scrapping them outright, they are kept running and that any further improvements required by the new coalition government are implemented over a trial period.

It would be foolhardy to chuck out what are costly arrangements already in place, only to find a similar system will need to be set up in the fairly near future.
Therefore, any decision to scrap them should only be made after a proper assessment of benefits versus their costs has first taken place.
No such analysis has yet been published by the Coalition Government, merely a bald assertion in one party’s manifesto that if they were to be elected, HIPs would be scrapped.

Surely a considered approach is more appropriate, especially as many people have believed in the logical need for HIPs (or something similar) and have staked their future job prospects in the continuation of the “Housing Pack” industry in some form or another?

Here are some relevant comments made about HIPs in earlier published information.

___
Sellers paid for more than 1.1million packs last year, netting £44million in VAT for the Treasury, yet only 650,000 homes were actually sold!
Hundreds of thousands of home owners must have been left with worthless HIPS.
Isn’t this an indictment of the efficiency of estate agents. So many instructions, so few completions? What was done about that?

___
HIPs ‘have not hurt housing market’
Monday, 5 April 2010
www.independent.co.uk
Hips were first introduced in August 2007 for properties with four or more bedrooms in England and Wales, before being gradually rolled out across the rest of the market.

___
www.financialpost.com The problem with agents in Canada.
This calamity suggests agents have manufactured their own pain!

___
One third of Home Information Packs ‘unsatisfactory’
Published: 7:30AM GMT 15 Mar 2010
www.telegraph.co.uk

Trading Standards at Birmingham City Council, in conjunction with the Property Codes Compliance Board, found that 30 per cent were rated unsatisfactory when measured against regulations.
Hips, which can cost between £200 and £400 were introduced to speed up the home buying and selling process but the packs have been branded “a waste of time” by critics since their inception in August 2007.

The report found that the most common problems were an absence of information on complaint / redress procedure, no consumer information or no company contact details as well as technical issues with the search – not the most impossible of faults to have to put right economically.

But isn’t this really just another failing caused by estate agents, who chose the cheapest possible HIP providers and generally take a profit from selling the product on, too?

___

The Way Forward:
Hips providers should NOT give up. They should continue to offer their services as optional through solicitors, but NOT through estate agents.

Hips providers could offer check valuations, as an additional service to vendors when they are deciding to market a property.

Armed with this extra information, vendors could more confidently select the right estate agent and be forewarned about those agents who are, in fact, over-stating the value of the property to be sold merely to win the instruction.

For example: If the check valuation said the house was currently worth £200,000 and two of the 3 agents approached, suggested marketing near to this figure but the third suggested marketing it at £230,000; the vendor would be pre-warned that the agent with the highest valuation is unlikely to be the most genuine (or realistic) of the three agents that were approached.

It seems abundantly clear (when you think about it) that it would be most unwise to simply scrap HIPs.
What was perhaps unwise was the last government’s decision to water down HIPs by making the survey aspect of a HIP optional only.

Footnote:
Whilst this article may appear provocative or controversial to some, we do not wish to offend. We would be happy to meet a spokesperson for estate agency and have informal but constructive discussions in an effort to bring about some genuine improvements.

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