The latest figures from The Land Registry published this morning explodes the myth that the introduction of the controversial Home Information Pack was responsible for the housing market slow down. According to the Government agency, in August the number of properties sold under £250,000 was down by 14.5% and by 10% across all prices on the same month in 2006 but this was a trend that had started in May, four months before HiPs were introduced.
The number of cheaper properties sold in May was down 15% on May 2006, June was down 22% and July 33%. HiPS for larger homes were introduced on 1st August. “The RICS who had proposed a judicial review to delay HiPs as well as some mortgage companies had suggested that people were put off marketing their home because they had to pay £300 to have a Pack prepared” said Henry Pryor, housing expert and founder of The HiP Exchange. “But many agents are offering free Packs and every single provider can offer deferred payment via HiP Payment Service so that the Pack can be paid for up to ten months after it has been prepared.
“The latest figures from Land Registry suggests that six successive interest rate rises on top of house price inflation of up to 20% per annum put house prices beyond the reach of most sensible buyers. Purchasers were already reluctant to commit months before HiPs were introduced, lenders in turn have since pulled back from offering insane mortgage products that would condemn the borrow to 25 years of mortgage slavery and the market was ready for a readjustment.
“The supply of new property to the market has dropped by nearly 50% which perversely is what is supporting house prices at present” he said. “It remains to be seen by how much forced sellers will have to discount the property they have to sell in order to get interest. Buyers are already offering between 5 and 10% below asking price and many are concerned that whatever they offer today could be cheaper tomorrow”.
Pryor continued. “For political reasons, some people suggested that the introduction of Home Information Packs has been the cause of the slow down in the housing market but the buying public are actually more savvy than they are given credit and most have realised that the market got too hot and has seized up. Sentiment is now swinging the other way allowing for a correction to the bull run of the last seven years.”