Abolishing HIPs Is Affecting The Property Market
I don’t know whether it is sheer exuberance about the abolition of the unloved HIPs that is enticing people to chance their arm on the property market, or just a pent up demand to sell.
When the august Royal Institution of Surveyors reports that there may be 15% more sellers now that HIPs have gone, then you know that there has been a change in the dynamics of the property market.
What puzzles me, though, is why removing the need for a HIP has boosted the number of sellers like this.
If you think how much it costs to sell a house via a conventional estate agent and compare that to what HIPs used to cost, Hips only added a small (almost insignicant) amount to the total cost of selling.
Look at these figures. I think its reasonable to assume that an estate agent will charge 1.5% plus VAT. On a £200,000 house that will come to £3525. You used get a HIP for about £225 and that would include the energy survey, which has not been abolished.
You can see how insignificant that cost was compared to the dreaded bill from the estate agent. Surely 15% more sellers will not be attracted to those savings.
Although I can understand that HIPs were seen as a necessary evil, that actually had no real benefit to anyone except those who prepared them, maybe they acted as a brake on opportunistic sellers. They were too much hassle for those who wanted to dip a toe into the market to see what happens.
If that’s the case, then although many of those 15% additional sellers would be keen to sell, a number would only part with their home for what they perceive as a good price. They are probably not committed sellers.
The problem is that an influx of sellers onto the market, however committed they are, gives the impression that a buyer has loads of choice. Buyers will (and should) bargain hard to get the best deal and price rises will falter as a buyers market develops.
Maybe, maybe not. According to Peter Bolton King, Chief Executive of the National Association of Estate Agents (NAEA), “Whilst house prices may dip in certain areas as additional properties come onto the market, in other areas, any increase in supply would still not be enough to meet the current demand.”