Have HIPs Inadvertently Stabilised the Housing Market in the UK?
There was an interesting discussion on BBC 5Live business this morning regarding the state of the housing market
Prior to the introduction of Home Information Packs (HIPs), a proportion of the properties on the market for sale were by Sellers who “dipped their toes” into the market to see whether they could find a buyer for their property. If so, they then became buyers and the housing market benefited. If they were unable to find a buyer they simply withdrew their property for sale, at effectively no cost. All estate agents operate on a no sale no fee basis.
As you now need to pay for a formal HIP pack and have it in place before you can market your property for sale, the suggestion was made that this has deterred the “toe dippers” from coming to the market. As a result, house prices have stabilised as fewer properties are being placed on the market for sale.
This may well have been true initially, but the credit crunch has been a huge influencer. Most estate agents have now introduced schemes to ensure no upfront payments for HIPs are required. The cost may be postponed until the sale completes, the property is withdrawn or an extended period of months.
The counter argument is that the “toe dippers” have caused more problems than they are worth. They can be characterised with unrealistically high valuations ( as they can always withdraw), wasted money by Estate Agents in their time and irrecoverable advertising costs and the stress and discomfort they cause to genuine sellers and buyers by pulling out at a later stage.
Part of the rational behind the introduction of HIPs was to create more certainty in the Housing Market. This may well have been achieved with the demise of the “toe dippers”.
If a further by-product is that house prices have stabilised, and a recovery in house prices can follow, most I feel will be rather pleased.