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HIPs causing house price fall

jenz
jenz Posts: 66 Forumite
in House buying, renting & selling
Read today that the introduction of HIP's are one of the reasons why house prices fell - anyone tell me why this has happened - I would have thought it would have been the reverse - that sellers would increase their house price to cover the additional costs.
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Comments

  • Guy_Montag
    Guy_Montag Posts: 2,291 Forumite
    1,000 Posts Combo Breaker
    jenz wrote: »
    Read today that the introduction of HIP's are one of the reasons why house prices fell - anyone tell me why this has happened - I would have thought it would have been the reverse - that sellers would increase their house price to cover the additional costs.

    Typical Month:
    3 x 4 bed houses @ £300k
    3 x 3 bed houses @ £200k
    3 x 2 bed houses @ £100k
    Avg house price: £200k

    July - people get their 4 bed houses on the market before hips
    4 x 4 bed houses @ £300k
    3 x 3 bed houses @ £200k
    3 x 2 bed houses @ £100k
    Avg house price: £210k

    August - few people get their 4 bed houses on, having added them last month
    2 x 4 bed houses @ £300k
    3 x 3 bed houses @ £200k
    3 x 2 bed houses @ £100k
    Avg house price: £187.5k

    You will also get rid of the kite flyers - those that put their house on the market at some outrageous value, in case some muppet comes along to buy it.
    "Mrs. Pench, you've won the car contest, would you like a triumph spitfire or 3000 in cash?" He smiled.
    Mrs. Pench took the money. "What will you do with it all? Not that it's any of my business," he giggled.
    "I think I'll become an alcoholic," said Betty.
  • nelly_2
    nelly_2 Posts: 17,863 Forumite
    10,000 Posts Combo Breaker
    It's lies! Its cos people are finally waking up the the massively over priced housing market and the trouble in the lending market.

    check this out http://i241.photobucket.com/albums/ff247/Geckko/MailIPW2.jpg
  • Generali
    Generali Posts: 36,411 Forumite
    10,000 Posts Combo Breaker
    jenz wrote: »
    Read today that the introduction of HIP's are one of the reasons why house prices fell - anyone tell me why this has happened - I would have thought it would have been the reverse - that sellers would increase their house price to cover the additional costs.

    HIPs aren't the reason house prices seem to be falling. The reason that they are falling is mostly just because they are.

    IMO, asset price bubbles are inherently unstable and one day must burst. They can be pricked by direct external action to drive prices down but usually they just stop rising because there's nowhere else to go.

    That's what I think is happening. It's too soon for the credit crunch to be having much of an effect. Ditto HIPs.

    Don't expect to read that viewpoint in the paper though. People love an asset bubble because it makes them feel rich and clever. The mob'll be looking for someone to lynch once they realise the party's over. To do that they'll need someone or something to blame. That's where HIPs and credit crunch come in. Probably 'preditory lenders' too.
  • dannyboycey
    dannyboycey Posts: 1,060 Forumite
    Guy_Montag wrote: »
    Typical Month:
    3 x 4 bed houses @ £300k
    3 x 3 bed houses @ £200k
    3 x 2 bed houses @ £100k
    Avg house price: £200k

    July - people get their 4 bed houses on the market before hips
    4 x 4 bed houses @ £300k
    3 x 3 bed houses @ £200k
    3 x 2 bed houses @ £100k
    Avg house price: £210k

    August - few people get their 4 bed houses on, having added them last month
    2 x 4 bed houses @ £300k
    3 x 3 bed houses @ £200k
    3 x 2 bed houses @ £100k
    Avg house price: £187.5k

    You will also get rid of the kite flyers - those that put their house on the market at some outrageous value, in case some muppet comes along to buy it.

    I just don't buy that at all. You're not a secret Rightmove employee are you ;)

    The vast, vast majority of people selling a 4 bed house would not be put off by a few hundred quid. Couple this with a general feeling that HPI has run it's course and selling sooner rather than later would be a good idea, and it just doesn't add up.
  • dannyboycey
    dannyboycey Posts: 1,060 Forumite
    Generali wrote: »
    It's too soon for the credit crunch to be having much of an effect. Ditto HIPs.

    With all due respect (and I mean that) - That sounds like a comment from someone with a vested interest in continued HPI.

    However, time will tell - we'll have to keep an eye on the land registry figures over the next few months.
  • Guy_Montag
    Guy_Montag Posts: 2,291 Forumite
    1,000 Posts Combo Breaker
    dannyboycey wrote: »
    I just don't buy that at all. You're not a secret Rightmove employee are you ;)

    The vast, vast majority of people selling a 4 bed house would not be put off by a few hundred quid. Couple this with a general feeling that HPI has run it's course and selling sooner rather than later would be a good idea, and it just doesn't add up.
    I'm not saying many people are putting off selling at all, in fact I doubt anyone will have.

    If you had the choice between getting your house on the market in the last week of July or the first week in August, the latter costing you an extra £400 or so, which would you go for? You would go for the former, better to get your house on then, even if you're not quite ready to sell, than to wait that extra week.

    Because hips only effect 4+ bed houses you will see the index being skewed up in July (reflecting an increase in proportion of expensive houses) & down in August (reflecting the equivalent decrease).

    Guy_Montag:
    600+ posts on HPC (before the ban)
    3600+ posts on GHPC (oh f'k I need to get a life)
    "Mrs. Pench, you've won the car contest, would you like a triumph spitfire or 3000 in cash?" He smiled.
    Mrs. Pench took the money. "What will you do with it all? Not that it's any of my business," he giggled.
    "I think I'll become an alcoholic," said Betty.
  • dannyboycey
    dannyboycey Posts: 1,060 Forumite
    Guy_Montag wrote: »
    If you had the choice between getting your house on the market in the last week of July or the first week in August, the latter costing you an extra £400 or so, which would you go for?

    I go shopping at 9am on a Saturday morning. And why is this relevant? Because the general apathy and laziness of the British public ensures that I can get a parking space and dash round almost empty shops at breakneck speed and get home and continue with more enjoyable pursuits, all before many people have scratched their bums deciding whether to have coco pops or frosties for breakfast (you can tell I'm not the world's greatest philanthropist :p )

    I digress... What I'm getting at is that I just don't belive so many people have the gumption to act so quickly.
  • Guy_Montag
    Guy_Montag Posts: 2,291 Forumite
    1,000 Posts Combo Breaker
    dannyboycey wrote: »
    I go shopping at 9am on a Saturday morning. And why is this relevant? Because the general apathy and laziness of the British public ensures that I can get a parking space and dash round almost empty shops at breakneck speed and get home and continue with more enjoyable pursuits, all before many people have scratched their bums deciding whether to have coco pops or frosties for breakfast (you can tell I'm not the world's greatest philanthropist :p )

    I digress... What I'm getting at is that I just don't belive so many people have the gumption to act so quickly.
    I guess we'll just have to disagree. I'm not sure how many people it would require to make that difference.

    Bear in mind that the sort of people flogging four-bed houses will typically be richer, & typically richer people are more switched on.
    "Mrs. Pench, you've won the car contest, would you like a triumph spitfire or 3000 in cash?" He smiled.
    Mrs. Pench took the money. "What will you do with it all? Not that it's any of my business," he giggled.
    "I think I'll become an alcoholic," said Betty.
  • dannyboycey
    dannyboycey Posts: 1,060 Forumite
    Guy_Montag wrote: »
    typically richer people are more switched on.

    A very brave post... I dare you to put it in the 'debt free wannabe' section :D
  • Debt_Free_Chick
    Debt_Free_Chick Posts: 13,276 Forumite
    10,000 Posts Combo Breaker
    If house prices are falling, it's because buyers are offering less and sellers are accepting lower offers.

    Quite what either party's reasons are will never be known.

    Still - we can all speculate about the reasons :rolleyes:
    Warning ..... I'm a peri-menopausal axe-wielding maniac ;)
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