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Estate agents talking rubbish

Ed Bowsher
by Lovemoney Staff Ed Bowsher on 06 November 2009  |  Comments 6 comments

I'd welcome a 'pause' in the housing market in January.

I had to laugh when I read a press release from the National Association of Estate Agents this morning. It's a beautiful example of a professional body engaging in special pleading. 

The Association's spokesman, Gary Smith, says: "It is now up the Government and the banks to do more to keep the momentum of market recovery going.' 

To which my reply is: Why? 

Hasn't Mr Smith realised that an overheated property market is one of the reasons we got into our current mess? It's not the government's duty to engineer permanently rising property prices. The government should be focusing on creating a stable, diverse economy that isn't driven by property-fuelled consumer spending. 

Mr Smith continues: "A good place to start would be for the government to extend the Stamp Duty holiday, which mainly affects first time buyers, and it currently scheduled to end in December. 

"The danger is that this short-sighted policy could precipitate an unwelcome pause in the housing market at the start of the New Year." 

If you gave first time buyers a choice between an extension of the stamp duty holiday or a 5% fall in house prices, I suspect most would go for lower house prices. That's certainly what I want to see happen. Lower prices are the best way to get more young people  on the housing ladder. 

Don't get me wrong, I wouldn't want a big 20 or 30 per cent fall. That would push too many people into negative equity and inflict too much damage on consumer spending. 

But I'd welcome a small fall next year. That would help first-time buyers and reinforce the message that property shouldn't be an easy way to make quick profits. After that property prices will hopefully move sideways or rise gently as the economy rebalances away from an over-reliance on property and the financial sector. 

Of course, things may not work out that way, but I'm living in hope.....

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Comments (6)

  • billyboy121
    Love rating 18
    billyboy121 said

    SevenPillars said 'I conclude that there can be no return to those days, because ultimately the banks now know that if they make the same mistakes again, the next time they will all go under as no amount of Government bailout will rescue them, the country will be bankrupt'  - I'm not so sure: looking at the way that the government has dealt with those banks who were reckless in their lending approach, there haven't really been any negative consequences for the people responsible so I don't think that the situation won't happen again for the reason you state. I suspect that we're unlikely to see such a perfect storm combination of factors again (cheap credit, deregulation of 'personal' finance markets, easing of insolvency laws and a  PR-obsessed, pro risk government with a very loose grasp on finance and economics presiding over it all) that will create the kind of boom we've seen over the last decade, though there will be other bubbles, such is the nature of the market economy

    Report on 09 November 2009  |  Love thisLove  0 loves
  • SevenPillars
    Love rating 62
    SevenPillars said

    Billyboy121, in a way the market is now regulating itself as the banks have withdrawn the very products that effectivly were responsible for the bubble in the first place. Estate agents are now complaining that despite the Government propping up the banks and providing them with finance, the banks are not lending. I would argue that they are not lending because they know where the UK sub-prime problem is and fear repeating the mistakes of the recent past. No doubt in time, especially if someone starts saying "its different this time", they will forget, but by then they will have probably come up with all manner of new, questionable products, but this may take a while. We also still await confirmation of how the FSA plans to regulate the market in the future, so the banks may have their hands tied anyway.

    I agree with your criticism of the Government, the opposition as well, Tories sat back for 10 years and said nothing, only woke up once everything hit the fan and then claimed credit for supposedly warning against it, especially as there was easy home owner votes to pick up. The bankers have to a large degree got away with it, but not even they can revive the dodgy mortgage products so soon after the recent financial collapse.

    Yes, there will always be bubbles and with any bubble, when making money and profit is seen as easy, dishonesty, corruption and fraud usually follow, history is full of examples and the patterns repeat.

    I just think that the UK housing market faces serious problems because there has been no real fall in prices, yet the mortgage products that supported those price rises have effectivly been removed because of the fears the lenders have about them. After all, they probably know the true facts from internal audit, much of which will probably never be made public.

    Report on 09 November 2009  |  Love thisLove  0 loves

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