Annual house price inflation in England and Wales fell to 4.8 per cent in the month to December 8th, its lowest in nearly 2 years, a survey by property website Rightmove showed today.
The survey also showed asking prices for homes fell by 3.2 per cent on the month, the biggest monthly fall in since the survey began nearly six years ago. The monthly figures are not adjusted for seasonal factors and Rightmove said the decline was exacerbated by a larger proportion of smaller properties being put on the market to avoid the cost of having to provide Home Information Packs (HIPs). HIPs include a number of legal documents and a certificate rating the property's energy efficiency.
HIPs were introduced in the summer for larger properties but from December 14 sellers of properties with two bedrooms or less are also obliged to provide them to prospective buyers.
Rightmove said 48 per cent of properties put up for sale in the first week of December had no more than two bedrooms compared with 38 per cent last year. It estimated that accounted for 1.1 per cent of the 3.2 per cent decline in asking prices.
It also expects the increase in the number of smaller homes coming to market will depress asking prices in January.
"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," said Rightmove commercial director Miles Shipside.
He added the property market was entering "uncharted territory" in 2008 as tight conditions on global money markets would have a bigger impact on the market than the Bank of England's official Bank rate.
"One way or another we need a further 0.5 per cent cut in the cost of credit to borrowers early in 2008 just to return market borrowing rates to where they were before the credit crisis," he said.