HIPs continue to distort market

Rightmove, the property website, has published October data indicating that the introduction of Home Information Packs (HIPs) for three-bedroom houses is continuing to distort the property market.

Large numbers of three-bedroom homes came onto the market in the weeks before the HIP requirement became mandatory at the beginning of September, creating variations in both new supply and average asking prices.

At the same time larger properties, with four bedrooms or more, became more plentiful, having passed their HIP deadline back at the beginning of August, before which a surge in larger properties for sale was evident.

Rightmove is forecasting that when one and two-bedroom properties meet their HIP deadline, similar distorting effects could cause prices to fall by up to 5% in a month, although this will largely be reversed in the following month.

Miles Shipside, Commercial Director of Rightmove, points out that “legislative tinkering involving future cut off dates has a history of unbalancing markets. In a stable market this presents fewer dangers, but in today’s more sensitive financial environment the effects can be more exaggerated”.

Longer term data from Rightmove shows that house prices increased by an average of 0.5% over the past three months, compared with 1.5% in the previous quarter.

The figure of 0.5% is the lowest recorded over a three month period since 2005, and according to Mr Shipside “surges of properties coming onto the market increase both competition among sellers, and increase buyers’ bargaining power”.

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