TIGHTER HIPS RULES COULD DAMAGE HOUSING MARKET FURTHER

In some circumstances - for example, leaseholds where information is needed about charges and joint access - vendors might seek professional advice.

Estate agents might refuse to give any help at all - because the law directs that when agents supply information used in completion of the PIQ, they may be liable for prosecution under the Property Misdescriptions Act.

Vendors who fill in the form without outside help will not be legally liable for prosecutions of this sort.

In many cases, of course, PIQs will be completed painlessly and with no undue delay. Where owners seek legal guidance, the scope for delay is obvious.

However Ashley King at Simply HIP maintains: "Reputable HIP providers will assist vendors in the completion of the PIQ form online and without delay, keeping the time taken to complete the form to a minimum.

"Simply HIP already offers a PIQ form completion service, which includes a vendor helpline, to all clients.

King says: "With all these changes coming into force, it is important to ensure your HIP provider subscribes to the HIP Code, only uses accredited search providers and is regulated by the Property Codes Compliance Board thereby ensuring the required £2M indemnity insurance, an effective consumer redress scheme and professional level of service are guaranteed."

All this suggests a degree of complexity creeping into what used to be a fairly simple job of selling a house.

The dangers are acute for owners who previously indicated their home was for sale to a handful of people.

Henry Pryor, a housing market commentator who runs the website www.housing expert.com, says: "The danger of these new rules is that the grey market will shut down.

"The grey market is where agents keep properties in the bottom drawer, to be offered only to likely local buyers.

"In parts of London, notably Hampstead and Regents Park, and other popular locations throughout the country, many properties sell by the grey market. They never officially go on sale, but pass discreetly from one owner to another.

"From April 5, these properties will also now require a HIP."

James Hyman, Partner for Residential Sales at Cluttons, has this assessment: "Changes to First Day Marketing will not slow sales for genuine sellers up to speed with HIPs legislation and will not see any further delays in marketing their property.

"HIP providers are well organised to turnaround a HIP very quickly. However, getting vendors to sit down and fill in the PIQ could prove more difficult and may cause considerable delays.

"Only one in 10 buyers ask to see a HIP so any delays experienced will be extremely frustrating to all sides."

The full extent of the collapse in housing market is dramatically illustrated in a new monthly analysis of property market data from eight sources, including the Land Registry and the Inland Revenue (HMRC), compiled by Henry Pryor.

Since 2003, he says, an average of nearly 175,000 homes has come to the market each month.

In January 2009, just 48,200 homes came to the market.

The long term average for the number of sales each month is 119,000. In January 2009, just 43,000 homes were sold.

Henry Pryor believes these figures set in context the claim by some agents that January saw a market pick-up.

:: INFORMATION: Details of the extension of HIP regulations can be found on the website of the Prime Minister's office at www.number10.gov.uk:80/Page 18363.

SHOULD OWNERS WORRY AS BUILDERS OFFLOAD HOUSES?

As new home prices continue to fall, builders are under pressure to make bulk sales to placate the banks which have loaned them money.

The website Smartnewhomes.com, claims the average price of a new semi-detached house - at £211,823 - is down more than £26,000 since January 2008. Apartments, on average, are typically each fetching £33,000 less.

The figures are significant because for several months, price falls indicated by this website have been noticeably smaller than those in other parts of the housing market.

It is hardly surprising that builders are considering bulk sales to housing associations, which are subsequently offered as 'affordable' homes for rent and part-sale to owners unable to buy in the mainstream market.

This formula meshes with Government policy of mixing tenures to produce diverse communities. But might it change the character of a community?

Around 46% of homes built in December 2008 may have been sold to social landlords, against 18% in the same month a year ago. But some owner occupiers fear these deals could hit property values.

Building magazine reports a case in Hampshire, where 20 units on a luxury development by Bellway Homes in the village of Lindford were sold to social landlords.

One owner fears his £230,000 home has already lost £30,000 in value, and some owners, says Building, are considering legal action.

However, Building quotes a 'resident involvement officer' who is convinced that owners have nothing to worry about.

"The perception is this will turn into a slum because we have moved social tenants in," he says. "But we won't let it degenerate."

Nick Foley, a spokesman for the National Housing Federation who represents 1,300 not-for-profit housing associations providing 2m homes, says: "We are seeing a lot of desperate developers asking our member associations to buy homes they cannot sell on the open market.

"We are only interested in buying new homes if they meet all our requirements. Those we buy are more likely to be family houses than flats.

"Ironically there are also different regulations regarding space and environmental ratings in public and private sector housing", he says. "A lot of properties built for sale won't meet high standards required in public sector housing."

However, Foley does not think social housing is likely to affect values of other homes on the same development.

"Most new developments now contain a proportion of social housing as a condition of planning permission," he says, "Old perceptions which suggested owner occupation cannot thrive alongside rented homes have gradually broken down."

WHAT IS FAIR PRICE OF A HOUSE AS MARKETS FALL?

The average price of a home is around £150,000 - down from nearly £180,500 in January 2008, according to latest figures from Nationwide BS, Britain's biggest building society.

So when do property prices actually level off?

Capital Economics, the consultancy which predicted a serious bust in the housing market from 2005 - about two years early - has remained consistently bearish (warning of more distress) in predictions for the housing market.

At last, it has addressed the question of where house prices will settle in the long term.

It reckons the fair value for a house is somewhere between £115,000 and £135,000 - still about 15% below the Nationwide BS figure for January 2009.

Ed Stansfield at Capital Economics says: "That cash figure is not constant over time.

"For example, if rents were to fall this year, house prices would also need to fall to keep rental yields constant, while higher rents would boost the sustainable level of house prices."

There are three key factors which point the price of an average home at somewhere between £115,000 and £135,000:

:: Assuming the long-term income-house price ratio of 3.7, average household earnings of £30,500 suggest an average price level of around £115,000.

:: The long-term trend in house prices is a rise around 2.5% per year. At present, that suggests house prices should be currently around £135,000.

:: If value is calculated on the basis of likely rental income, the average annual rental income of £10,000 at present implies fair value for house prices of £125,000. the £10,000 income would represent an 8% return before all maintenance costs and interest charges are factored in.

The Capital Economics survey concludes: "Although there is clearly no single infallible estimate of the 'right' level of house prices, our three alternative approaches all generate an estimate that fair value is roughly £125,000 at present."

However, Capital Economics has warned for many months that prices won't gradually shrink to this level - and stop.

It sees a 10-15% "undershoot" on the cards, as happened in both the 1970s and 1980s - before the price bounced back to settle around £125,000.

WHY AUCTION ROOMS ARE GETTING CROWDED AGAIN

Possibly because they are earning virtually nothing on money left in bank or building societies, bidders are crowding back into Britain's auction rooms.

Allsops, Britain's biggest residential and commercial auctioneer, claims a sales rate of 91% and 83% respectively in its first two sales of 2009.

Allsops's Duncan Moir says: "There is a real depth of appetite in the market from people who do not want to leave money in the bank and now see real estate as an attractive proposition."

Savills Residential sale on February 16 was also a triumph: an 87% success rate produced sales totalling more than £19m.

There is plenty of evidence that bidders want cheap properties to provide steady rental income: Savills sold five units in the North at £62,500-£65,000 to investors.

When the market eventually recovers, these units should provide sizeable capital gains as well.

The February survey of the auction market from Essential Auction News says the average sales rate achieved in January was 68%, with 546 lots achieving £52.7m out of 805 lots offered.

Buyers seeking holiday homes in the South-West will probably be competing with investors at the Westcountry Property Auctions two day sale, fixed for Redruth (Mar 4) and Plymouth (Mar 5).

There is likely to be strong interest in the Grade II-listed former Falmouth Meteorological Observatory built in 1868, with bedrooms on the first, second, third and fourth floors (guide £120,000+), although on-street parking might reduce letting potential.

Other lots with clear potential in the Redruth sale include a three bedroom period cottage in a rural setting at Carthew, Near St Austell (guide £115,000+); a five bedroom home in fashionable Port Isaac on the North Cornwall coast with first floor roof area converted into three bedrooms and needing modernisation (£240,000+); and a detached barn with planning permission for conversion to a home on the outskirts of Lanvean, near St Mawgan (£95,000+)

A two bedroom detached bungalow with splendid views over Mounts Bay to St Michaels Mount round to the Lizard, described by the agents as 'a refurbishment product with graphic potential', should also attract plenty of bids off a guide of £100,000+.

:: INFORMATION: Westcountry Property Auctions (0870 2414 343 and www.westcountrypropertyauctions.co.uk).

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