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Inside Money

Business writer David Chaplin blogs on personal finance

How property prices can drop 4pc (and almost everyone wins)

Photo / Martin Sykes
Photo / Martin Sykes

I don't author reports predicting house price movements because it's not my area of core competence. But maybe I should, they seem so popular and perennial.

Most of the time, too, I don't read such property forecasts. Even in the unlikely event that the forecaster has got it right, there isn't much I can do with the information.

I did take the trouble, though, to read, or skim rather, this story containing a whole bunch of confusing data about house price movements over the next few years - just the usual.

What got me was the 4.1 per cent figure in the headline, which, coincidentally, matches almost exactly the typical real estate agent commission. So if you could somehow cut out that agent's fee, buyers and sellers would be no worse off next June than if a deal went through now (excluding, of course, any inflationary effects).

And the good news is, it's really easy to cut out the middleman. I know this because I've just sold my house without the dubious benefit of an agent. It was a real pleasure: willing buyer, willing seller and 4 per cent to play with.

My lawyer also told me that an increasing number of Trade Me and other direct house sales had passed by her desk in the last few months. I would like to see some national data on this trend.

The housing market is undoubtedly under stress but in such times the fat gets squeezed out - and agents who do not deliver any value must surely be feeling that pressure.

David Chaplin

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