The result of the general election is the best opportunity to remedy the ongoing house price crisis. It is all about affordability, affordability, affordability for those buying or renting housing to live in, as it forms a major part of the cost of living crisis.
Of course a significant amount of new housing needs to be built to compensate for the growing population but doing that is not going to reduce house prices by much and maybe not by anything at all. The reason for this is explained in our online post headed “The notion that we can build our way out of The Housing Affordability Crisis is utter nonsense”
The following explains the precise reasons why the present house price crisis is manifestly not as a result of the insufficient numbers of new houses being constructed – contrary to widespread belief! Also without additional community infrastructure, substantial new housing will simply worsen the infrastructure shortfall.
It seems that most political parties today support the idea of house prices increasing over time and it also appears that currently, no political parties are prepared to canvass on or sanction a reduction of house prices in their manifestos, even though the increase in house prices to the heady levels we are currently experiencing is as a direct result of the policies which previous governments have been pursuing!
My working experience includes over 30 years as a Chartered Surveyor with a property valuation qualification and during that time I observed the house price trends, both privately and professionally. Having done this I find these price trends strongly suggest that the relentless increase in house prices of past decades is more to do with the way estate agents have been legally allowed to operate against the natural economic market trends for some decades now.
If one considers, even for a short while, why it is that the general public maintain such a low opinion of estate agents, the answer to this quickly becomes plain.
It is that estate agents have been and still are, in reality, treading on the toes of those trying to get clear advice for knowing the correct market price of each residential property they are concerned with, whether it’s being bought, or sold.
This is because estate agents are trying to advise their contractual clients, the sellers, as to the best price they may be able to achieve, yet at the same time they are trying to help the buyers by basically doing precisely the same, namely advising them all about the prices they (the sole agent) have in their minds’ eye for the property which they are wishing to sell at the time! This is providing a distorted view of true or current market values, which is how market prices are continually being distorted.
In other words, what is actually happening is that estate agents basically guess at a price that a particular property might sell for in the market and, they tend to guess high so as to try not to bring themselves into disrepute; an uncomfortable situation for any organisation to find themselves in at any one time let alone all the time.
In addition, as they are mostly paid on a percentage of the price attained, they usually try and get as much as they can from each prospective buyer, even if there are sometimes no genuine or actual ‘other’ offers being submitted! It is simply too tempting for them to do this and bolster their fee; however best intentioned they may well aim to be.
This shows that estate agents, as advisers, cannot reliably assist either the seller, or the buyer with accurate market value analysis, because of the situation in which they find themselves, with their primary responsibility favouring the vendor.
The only solution to overcome the resultant adverse market position which the house-owning and renting public find themselves grappling with, is to campaign for a change to the way residential estate agents operate, by making them primarily responsible to professionally advise each buyer, (or each renter if the house is for rent), as to the price any particular property can attract in current open market conditions.
To do this estate agents would have to be made essentially to contract with each buyer (or each renter), and no longer have any business contracts dealing with potential selling, or letting clients at all.
This simple change would bring untold and immense improvement by restoring open market conditions for residential property being bought or sold on the market as well as being rented or let.
Not to change this now would simply allow the present regime to continue unabated. The tragedy, i.e. that of accelerating house prices, if allowing such a thing to happen, should now be plain for all to see. This is what we are experiencing, the present and extreme house price crisis. Available finance to buy at such historically high prices is another significant factor which is helping to stabilise house prices at the levels being negotiated by all the selling agents.
Extremely high house prices like these are factually connected with three of the other top 5 issues for voters. This elevates the housing crisis to become one of the top priorities now requiring a swift solution.
No political party taking part in the 2024 general election has, in its party manifesto, a realistic proposal to deal with house price levels which are now in a very substantial crisis, when taking into account the relatively low average yearly earnings benchmark, certainly regarding wages within England and Wales.
It must, of course, be accepted that changing the way houses are currently marketed will receive staunch objection by those in the present estate agency sector. Instead of attempting to agree or disagree however, it would be better that such important matters as these should be the subject of constructive dialogue in order to arrive at an acceptable and improvement solution. As the author of The House Price Solution I would like to take part in any such discussions.
The other equally important change necessary to peg house prices back to reasonably affordable levels is to make changes to the town and country planning rules such that local town and parish councils should decide all residential planning applications within their designated areas without a right of appeal. This would bring much needed housing to the exact locations within the towns and parishes where extra housing is most needed, especially for local working families. This aspect is fully covered on the other posts within this web site.
The political party that is handed the mantle of governing our country should not only understand the dilemma which everyone is in housing-wise, (namely that average house prices are now well in excess of 15 times yearly average earnings), but that the new government should be able to properly understand the housing markets’ economic landscape and resolve to develop and use this necessary wisdom combined with the powers they will have.
It is becoming clear that all towns and parishes with a housing crisis like St Ives & Porthleven in Cornwall, The South Hams in Devon, Ilfracombe in North Devon (as screened on BBC Spotlight on 30th July 2024), as well as Frome in Somerset and Whitby in North Yorkshire, should canvass for fully devolved planning decision-making powers to be provided to local town and parish councils up and down the whole country.
The towns named above have been in the news lately as being unable to resolve the crisis in housing, endemic in their regions over several decades past, where local workers as well as the retired are concerned. All this despite more powers having been devolved to their county or regional authorities over past years. This strongly suggests a wholly different planning policy is now needed.
Shortcomings such as these ought to be tackled head on. It would seem that this is an issue needing to be raised at the very highest level and without delay. So, I’m including it here as well as referring it to my local MP. You should do the same too if you think there is a similar problem in your local area.
If you want to know what to ask them, ask why they aren’t changing the way houses are both planned for and marketed, to finally resolve the poorly performing, over-priced and obdurate housing markets around the whole country?
It is important to understand that house prices are variable but should broadly relate to average yearly earning levels locally, taking into account other things such as current interest rates and acceptable mortgage term lengths. However, this can only happen once the housing markets are operating as they should, i.e. operating as arms length markets in accordance with, free market economic fundamentals.
Anyone may add their own comments to this blog if they wish to, whether in support, or otherwise and are warmly invited to do so.
This site proposes changes to the whole way in which houses are marketed by agents as well as bringing in far more effective planning controls.
For more information on the necessary house marketing changes, go to:
The house price affordability crisis
“Solving the affordability crisis”
Posted by: Peter Hendry, Consulting Valuation Surveyor
Author of:– The House Price Solution
Please also note. Unless things change significantly along the lines explained, countless people will continue to experience considerable financial anxiety or pain so, please sign our petition.
The link below opens this is in a new tab for you to look at.
The cost-effective way to stabilise housing affordability across the whole of Britain
Your action in asking our government to debate this could help bring about all of these much needed changes.