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Hips 'push house prices down'

17/12/2007

Asking prices in the UK residential property market fell by 3.2 per cent in December, according to the Rightmove house price index.

The drop is a substantial fall from November's negative 0.7 per cent growth and slashes annual asking price growth from 7.9 to 4.8 per cent.

Home information packs (Hips) are responsible for 1.1 per cent of the decline, Rightmove believes, which in part has been caused by the traditional sales slump in the festive season.

It says a rush of cheaper two-bedroom properties has flooded the market ahead of the introduction of Hips on December 14th, exacerbating already quiet – and nervy –conditions.

"New listings are very low at this time of year, so the artificial wave of 'low-end sellers' has really distorted the average prices of new properties coming on to the market," Rightmove commercial director Miles Shipside commented.

"It is wrong… to speculate that prices will continue to fall based on one month's statistics from a quiet December."

Rightmove predicts further stagnation in 2008 but warns the market is entering "uncharted territory" in 2008.

Mr Shipside called for banks to act to maintain liquidity and said "one way or another" a 0.5 per cent cut in interest rates was necessary early next year.

"We are in a different world compared to previous housing downturns," he added.

"It is a world of international banking interdependencies, and a world in which the robustness of the UK housing market has never been tested."