House information packs take toll on property prices

A double whammy of higher interest rates and sellers rushing to put their properties on the market before the introduction of Home Information Packs (HIPs) is finally taking its toll on house prices.

The property website Rightmove said that the average asking price of a UK home rose by just 0.4 per cent in the five weeks to 12 May, the smallest increase this year. Although the figure is still in double-digits, the year-on-year rate of increase fell from a four-year high of 15 per cent to 13.1 per cent. The average asking price was £237,361.

Some areas of the country suffered outright falls during the month. The worst-hit area was the West Midlands, where prices dropped by 2.6 per cent. The North, North-West and East Midlands saw small declines.

Rightmove said the modest UK price rise was smaller than traditionally seen during the peak of the spring marketing season, and blamed the four interest rate rises since last August for the slowdown.

The website added that new instructions per estate agent in the past two weeks were 4 per cent up on a year ago, a substantial turnaround from the recent 10 to 15 per cent fall. It said vendors were clearly choosing to hoist the For Sale sign before the 1 June HIPs deadline.

Miles Shipside, commercial director at Rightmove, said: "It is strange to see this in a rising interest rate environment, which would normally discourage more sellers."

He added: "The added incentive for both them and their estate agents is to potentially save several hundred pounds by avoiding the cost of a HIP. This seems to be swelling the choice for buyers and shrinking the pace of price rises for sellers."

The Royal Institution of Chartered Surveyors last week announced that it was going to take the Government to court for what it regarded as a failure to carry out proper consultation prior to the introduction of the controversial HIPs. The Conservative Party failed to halt the packs after losing a House of Commons vote to have them scrapped.