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Helpful Advice

House Price Surge

House Price Surge

By Peter Barry

According to figures published by the property information firm Hometrack, house prices in England and Wales are increasing at a rate that is the fastest over the past six years. While London will always sit in its own unique housing ‘microclimate’, national trends do still have an impact on what happens in the capital – as chains filter down from other areas and many of the same national house-buying expectations and behaviours apply.

London calling

However the current surge in property prices can – in part at least – be attributed to the housing market in London. There is a continued outweighing of demand to supply, meaning that the number of potential buyers far outnumbers the available housing stock on the market in the capital (and the South East of England) and this will inevitably push prices up. In fact, according to the research, the demand for residential property in London has grown by 15 per cent over the last six months while supply has actually fallen by just over half a per cent. So the gap has been widening and those hoping to bag a bargain in the recession will actually find themselves dipping further into their wallets than they hoped.

The knock-on effect of this is that vendors are enjoying quick sales with prices close to asking price – the research suggests that the average asking price over the six-month period was almost 93 per cent, which is the highest achieved price since July 2010.

Bursting the bubble

However, according to Hometrack, this intense market interest and sale achievement could be short-lived. A continued increase in asking prices to satiate demand is not sustainable in the long-term: there will come a point where purchasers are unprepared or simply unable to pay inflated prices for properties and the market could well stall. In a seller’s market, a seller can set the asking price, blow the ceiling price, or test the waters with a price that pushes the house far above previous pricing expectations. However, the market will always find its own natural price point again and vendors should take advantage of the current situation for as long as it lasts.