The Money Stop

It seems that the UK property market may be cooling at last, as estate agents are reporting that there has been an increase in properties coming up for sale. In the last few months that number of sellers has increased, but interest from buyers has taken a downward turn.

One online agency reported that the number of properties for sale has risen by over 13% in April, far above expectations. Another internet agency said that it had seen an increase in properties on the market by nearly 20% compared with the same time a year before. The trend appears to be the same across the market.

Although the time of year does see an increase in properties on the market, this time the numbers seem higher than usual. The shortage of housing stock that has had an influence on the way the market has risen seems to be reducing. The sellers’ market looks as though it is coming to an end, and the market may be close to its peak.

It seems that properties in the £150,000-£350,000 price bracket are having the toughest time, where affordability is tight and the slowdown is likely to bite hardest. First-time buyers are finding it extremely difficult to get into the market as property has been pushed further beyond their reach.

Another influence on the number of properties coming to market has been the wish to avoid the need for Home Information Packs (HIPs) in the lead up to their planned introduction of 1 June, and again in the lead up to the new date of 1 August.

Bank of England mortgage figure approval figures reached a twelve-month low in April at 107,000.

The Royal Institution of Chartered Surveyors believed that the HIPS, the continued increase in house prices and the increase in interest rates have combined to lead bring about a cooling of the market.

Estate agents believe that HIPs are single biggest reason for the increase in properties coming to market. These look to be extremely unpopular with sellers who will have to go to more trouble than before and, of course, pay for the packs.

Buyers, however, will see benefits with all the information they need in a single accessible pack. The uncertainty surrounding the introduction of HIPs has led to confusion, especially with the change in emphasis by the government, who said that the Packs would only be applicable to homes with four or bedrooms when the new date was announced.

Since then there has been even more confusion with a recent comment that there will be enough trained energy assessors by 1 August to encompass three bedroom houses. The government maintain that they announced that houses of smaller size will be included in the scheme as soon as enough assessors are available. If that happens by 1 August then three-bedrooms homes are likely to be included.

The general economy remains strong and interest in property is liable to remain so too. When confusion over HIPs dies down in the coming months, we are likely to see a return to normal trends.

Tom Smith
8th July 2007

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