Fool News: House Prices Boosted By HIPs Rush

by Szu Ping Chan on 15 October 2007  |  0 comments
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Average house prices rose by 2.7% over the last month.

Average house prices in England and Wales rose by 2.7% over the last month, according to figures published today.

The report by Britain's biggest property website Rightmove shows that average asking prices in their October index rose by 2.7% (£6,466), in contrast to a 2.6% fall the month before.

Rightmove paints a more rosy picture of the housing market than The Royal Institution of Chartered Surveyors (RICS) which reported only last week that house prices are falling at their fastest rate for two years, with 14.6% per cent more surveyors reporting a drop in house prices than a rise throughout September.

Rightmove attributed much of the recent rise to the distorting effect of Home Information Packs (HIPs) on the market. They reported a rush in three bedroom properties placed on sale in an eleventh hour bid to beat the HIPs deadline of 10^th September, when it became compulsory for sellers of these homes to prepare a HIP.

HIPs were first introduced on 1^st August, designed to provide clearer information for potential home buyers. They were originally only compulsory for homes with four bedrooms or more. The packs, which have left many skeptical about their value, provide information about everything from standard property searches to rating the home on an efficiency scale from A-G (rather like you would rate a fridge or a new microwave).

During the week before 10^th September, the number of three bedroom properties coming onto the market was 24,570,  65% higher than the average for the previous four weeks. The supply of one and two bedroom properties stayed constant during this period suggesting that HIPs are making a difference to property supply.

However, the Association of Home Information Pack Providers (AHIPP) stressed today that the "HIPs effect" was short-term and shouldn't make any difference to the housing market in the long-term.

The Rightmove survey also included some interesting data on regional price movements. The biggest gains were in London and the South-East, where asking prices rose by around 5%. By contrast, prices in Wales and the north of England fell by 6.1% and 4.2% respectively.