HIPs a shame for the property market?
Property prices continue on their downward trend in September for the third month in a row. This downward trend is evidenced from figures released from Nationwide, Halifax and today RICS and certainly not the news those who recently enetered the market will be wanting to hear.
RICS today reported in their now familiar bewildering manner and seemingly supported property flooding onto the market. Its monthly survey showed; a balance of 36% more surveyors reporting price falls than price increases, down from a net balance of -32 in August. In addition 41% more surveyors expected to see price falls in the coming months, up from a balance of 38.
In August, the average property lost more than £6,000 of its value of as the average price fell from £168,124 to £162,092, the biggest fall since 1983. Most commentators agree it is due to rise in supply of properties and a drop in demand.
Martin Gahbauer, chief economist, Nationwide said,
“Although the Halifax index showed a large drop in September, the less volatile three-month on three-month measure showed a drop of 0.9pc, the same as in the Nationwide index. This compares with three-month on three-month declines of more than 5pc in the deepest phase of the 2008 downturn in both indices. As such, the current declines are still on the modest side. None the less, market conditions have clearly loosened as more sellers have marketed their properties and buyer demand has remained weak. This may exert additional downward pressure on house prices in coming months. At this stage there is limited evidence of widespread distressed selling. Without more of this, price declines of the magnitude in 2008 are unlikely.”
Whilst our experience can be considered anecdotal for sure in comparison to the large above mentioned nationwide studies, our business has certainly seen an increase of properties coming to market since the removal of HIPs in May of this year. However, the number of sellers have increased but so has the number of sellers who tell us they are simply testing the market or describe a questionable desire to actually sell. We rarely witnesses this whilst Home Information Packs were in place.
Could the contributory effect of the suspension of HIPs not have been forecast and managed in a more controlled manner? We certainly expressed our direct concern back in June ‘ Speculative Sellers Return, Hip Hip Hooray’ and in previous articles the then shadow housing minister Grant Shapps’s office engaged in.
Home Information Packs were certainly not perfect, though one of their many benefits that was often overlooked was their ability to create a small barrier to enter the property market. This barrier was simply not an issue for anyone who was serious about selling their home but prevented those who could be considered by some as timewasters and not productive to a healthy property market.
Whilst there were thousands employed in the HIP industry of which many lost their income stream in an instant; there are substantially more who are now facing large amounts of negative equity for whom it is worth sparing a thought for as prices continue to fall. We do wonder if the same level of joviality shown by Grant Shapps, Eric Pickles and Kirtsty Allsopp (which we ran a caption competition on) in one of the photos from the day they scrapped HIPs would be displayed to those who are now forced to deal with potential repossession.
Where do house prices go from here?
And If we did have full control where we choose for the housing market to go next?
When will see the start of the re-invention and re-incarnation of the Home Information Pack?
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