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House prices set to fall as austerity measures start to bite

The new government’s initiatives, including the suspension of Home Information Packs (HIPs), reductions in public spending and rumoured increases in Capital Gains Tax (CGT), are having an immediate effect on the housing market.

More competition among sellers and a slowdown in the number of buyers it says shows the market is beginning to turn.

Miles Shipside, commercial director of Rightmove, comments:

“They say that troubles come in threes. The continuing mortgage famine has now been joined by a surge in sellers following the abolition of HIPs and investor reticence driven by rumours of CGT increases. Together, these factors are likely to put an end to this year’s recovery in house prices. It is an unfortunate concatenation of events that disrupts what was sort of passing as normal service, where investor appetite provided an uneasy balance to the first-time-buyer-starved market. A surge of HIP-free properties has come to the market, and mortgage-reliant buyers and wary investors are failing to match the increased supply. That spells tougher times for sellers and tenants, with more properties for sale and
fewer finding their way into landlords’ hands”.

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