I’ve been flat hunting in London for the past few weeks. I already knew the market was pretty over-heated, but there’s nothing like grim first-hand experience to show you just how mad it is out there. Flat viewings are mobbed. One place I saw had over 90 people view it in a single showing. And they’re being snapped up. Go to see a flat over the weekend and you’ll need to put an offer in by Monday lunchtime if you want to have a hope. Prices are well above their pre-crash levels. I saw a basement flat that went for £210,000 in 2006 being put on the market for £350,000. But it sold for even more. The asking price seems to have become a floor rather than a ceiling. Rather than haggle for £10,000-£15,000 off the list price, you’re expected to offer quite a bit more. Now, maybe I’ve been unlucky with where I’m looking. But there’s plenty of hard evidence that this sort of things is happening across the board. All the figures point to this being a massive bubble – here are three key points that prove it… 1. Buyers are paying the asking price The first major sign that there’s a bubble is the fact that the gap between the asking price and the agreed price has all but vanished. Estate agents like to use the promise of high valuations to persuade homeowners to sign up with them. Of course, buyers know this is going on, so they tend to put in a low-ball offer. As a result, the final deal lies somewhere between the two. However, according to property website Hometrack, this gap has shrunk to just 2%. Buyers are so desperate that any concept of negotiation has gone out of the window. It also implies that prices are rising so fast that even estate agents are unable to keep up. Hometrack’s historic data, which goes back to 2001, suggests that this indicator is a reliable sign that housing prices may be about to peak. Take a look at the chart below, courtesy of Hometrack
Posted on: Sat, 22 Mar 2014 17:10:37 +0000
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