The normal seasonal trend of falling asking prices during December has been magnified by an unseasonal surge of two bedroom or fewer properties avoiding their 14th December HIPs deadline according to property website Rightmove.

They believe that whilst this may bring some relief to estate agents who are normally devoid of new sellers just before Christmas, it brings further confusion at a sensitive time for the property market.

Rightmove estimates the ‘HIP effect’ has meant that the fall in asking prices across London of 6.8% would have been more like 4.5% had the deadline not occured last Friday.

At this time last year, 43% of properties coming to market had two or fewer bedrooms. In the week from 2 December to 8 December, this increased to 50%, which is a substantial increase in the proportion of smaller properties.

Miles Shipside, Commercial Director of Rightmove commented, “New listings are very low at this time of year, so the artificial wave of ‘low-end sellers’ has really distorted the average prices of new properties coming onto the market. It is wrong, however, to speculate that prices will continue to fall based on one month’s statistics from a quiet December.”

Tim Dalby-Quenet Manager of Bushells said, “We have noticed a slight increase in the level of valuations during December. However, we haven't seen an increase (year on year) in the number of new instructions either, small or large. Although potential vendors have been keen to discuss the implications of the HIP legislation, the extra cost of needing one has not caused many people to start marketing sooner than they would have done otherwise.”

Oliver Finn's Christian Harper said, “This is my 18th December in estate agency and this one appears to be stronger than any that I can remember. The introduction of HIP's has hit much resistance this year which has led to a variety of sources finding facts and figures on one database or another that suggest that the introduction has had an adverse effect, either affected stock levels or house prices generally - I am not convinced with these statistics in any shape or form. I personally feel that HIP's has had no impact on prices and to be very honest, no impact in any other area either.

“Valuation levels certainly increased prior to last weeks deadline, but is typical for the time of year. I tend to find that a large number of clients use December as a month for preparation prior to launching instructions in January.”

December 21, 2007