UK House Prices Situation at 12 10 2007: Fairly stable with small regional falls

UK House Prices Forecast: Continued regional falls, overall softening of market

RICS Members See Prices Falling

For the first time since October 2005, the RICS House Price Index is showing an overall fall in house prices.

The latest index data, for August, shows that 1.8% more chartered surveyors reported a fall in house prices in August than reported a rise. This is a substantial fall from July, when 10.8% more surveyors reported a rise than a fall.

RICS (the Royal Institution of Chartered Surveyors) found that average house prices fell in 8 of the UK's 12 regions, with property prices falling in the East and West Midlands, Yorkshire & Humberside, East Anglia, Wales and the North West.

RICS spokesman Ian Perry said that "Potential house buyers have become far more cautious as they wait and see what affect interest rate rises will have on household finances".

He also commented that affordability was at its "most stretched in over a decade" - compounding homeowner's worries about rising interest rates.

HIPs Introduced for Three-Bedroom Homes - 70% Now Covered

On the 10th September, Home Information Packs (HIPs) were made mandatory for anyone selling a three-bedroom home. This follows the introduction of the controversial packs for homes with four or more bedrooms in August.

The latest expansion of the scheme means that an estimated 70% of homes in England and Wales are now covered.

The scheme has been widely criticised with estate agents fearing that it would lead to a softening of the market as people sought to avoid the fee for the HIPs. In the month following the introduction of the packs for 4-bedroom homes, the National Association of Estate Agents reported that 63% of their members saw a reduction in the number of 4-bedroom or larger properties coming to the market.

However, even if this change can be attributed to HIPs, it seems unlikely to be a problem in the long term, as HIPs become more widely-required and accepted. Additionally, indications so far are that average costs are a little lower than expected - with NAEA members paying an average of just £350 per HIP - sweetening the pill slightly.

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