So in the middle of this ‘perfect storm’ what do we have. The utterly useless and clueless Ruth Kelly promoting HIPS for all houses. These sales packs will slow the supply of housing to the house market and so lead to a greater slowdown. Whilst falling house prices are probably a necessity after a bubble, this government policy has come at exactly the wrong time.
Umm, tell me if I’m completely bonkers here, but doesn’t a restriction of supply lead to higher prices?
8 responses so far ↓
1 dearieme // Dec 16, 2007 at 2:35 pm
You surely don’t expect logical economic thinking from the housing trade? On t’other hand, if HIPS are much like a peculiarly stupid tax on housing transactions, won’t they impede the market from clearing and thus doubtless be a Bad Thing?
2 Glenn (pka angry economist) // Dec 16, 2007 at 3:37 pm
We’re thinking of selling up and the estate agent will organise all the HIPS stuff for 350 quid; and add it onto their bill on top of their commission at the end. And all the HIPS stuff can be done in 3 weeks, the property can go on the market for viewing without the HIPS pack. Hardly a big disincentive to sell really! I really can’t see this impeding the market at all.
The insecurity and risk averseness of buyers and sellers plus tightening up of mortgages and higher cost of them is more likely to affect the market really. Plus there’s the stamp duty – scandalous when many properties are above the #250k mark.
3 Kay Tie // Dec 16, 2007 at 5:43 pm
“Hardly a big disincentive to sell really! I really can’t see this impeding the market at all.”
Just another Government tax handed out to interested clients. Each little one is not itself onerous. But bit by bit, it adds up and up and up, and eventually the system breaks catastrophically.
Personally I don’t care. I sold to rent. I hope the whole lot comes tumbling down and the Goblin King with it.
4 mmmmmmm // Dec 16, 2007 at 6:57 pm
Only if not met by a greater reduction in demand.
5 ONG // Dec 16, 2007 at 8:48 pm
I suppose this might reduce offer prices as only serious sellers will come to the market.
In other words people who are “testing” the market, and may therefore ask for higher prices will not put their houses up for sale.
6 dearieme // Dec 16, 2007 at 10:04 pm
Note to the uninitiated: English house-selling and buying is such a constipated disgrace of a process, that 3 weeks is a mere bagatelle.
Glenn thinks that the £350 he’ll pay, and the £350 that his buyer will pay to sell his own house, and so recursively on, is small beer. That’s his shout, but I’d rather spend that sort of sum on my own purposes than waste it on valueless quasi-legal rubbish.
7 cityunslicker // Dec 17, 2007 at 12:07 am
logci only gets you so far. if you bombed all the houses in the Uk until there was only one left, by Tim’s reasoning (TM) would be very, very valuable…this rather ignores other externalities.
In the same way, pouring vry cold water onto what is already a slowing market is not going to raise prices. The housing market is about is hugely affected by psychology and not real value, as we all know the sum of bricks and mortar plus land is considerably less than the sums which houses sell for.
Anyway, I am prepared to bet the UK house market sinks on this next year, so name me your terms…
8 David Hadley // Dec 17, 2007 at 5:04 pm
Oh, I dunno. It seems to me the real point of these HIPs things is the energy efficiency rating, which is the one thing the government were very keen on keeping in it when everything else meant to be in it went tits up.
You may think me overly cynical, but I do believe that a tax based on the ‘energy consumption’ of a household will soon be wheeled in as a ‘fairer’ and ‘greener’ replacement for the discredited council tax.
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