It’s now pretty clear that U.K. housing prices have double dipped, given that average prices fell further in June.
We’ve now seen three consecutive monthly price decline, as shown by the table below.
The removal of a burdensome Home Information Packet (HIP) requirement for home sellers (which added financial and time costs to selling a home) has spurred additional supply to hit the market:
The increase in the number of properties for sale is curbing the upward pressure on house prices. Estate agents have reported a sharp increase in instructions from new vendors following the recent abolition of HIPs, reinforcing the recent trend as more homeowners have been encouraged to sell following the improvement in house prices in 2009. The ratio of house sales to the stock of unsold properties on surveyors’ books fell for the fifth time in the past six months in May. (Source: RICS monthly survey, May 2010.) The easing in this ratio indicates a moderate loosening in market conditions, reducing the support for house prices.
Still, blaming the ‘HIPs’ for the price declines seems a bit cavalier, given that the information packets have been reported to add just 300 – 400 pounds to the cost of selling a house, which seems small relative to the value of average houses shown above.
Nevertheless, the HIPs excuse seems to be an established argument, and Halifax believes price weakness should abate by year-end, with UK housing prices forecast to end 2010 unchanged despite the recent declines.