So, is there a bubble in London and is it the media's fault?
Tue 29 Oct 2013
The big question is: is there a bubble, will it burst, and if so when?
This is actually not an issue for the majority of the UKs housing market. However in London, we have what looks
suspiciously like some estate agents talking the market down.
An article in the Financial Times quotes Ed Mead who last week challenged Rightmove over its house price
survey as saying: Buyers have the whip hand and until sellers expectations lower, the market, in central London
at least, will remain partially stalled. He says sellers are on average asking for about 10% more than buyers will
The article also quotes commentator Henry Pryor, saying: Sellers think that happy days are here again and are
pricing forward as a result. Buyers are more circumspect and those who benefit from the sanity check of a
mortgage valuation are going to find it frustrating. The problem with rapidly rising house prices is that valuation
models dont keep up with the pace of sellers expectations and deals unravel. Then theres Charles McDowell, a
London property consultant, who told the paper: Sellers expectations are being fuelled by headlines they read in
the media rather than specific data, which doesnt necessarily give an accurate picture. However, not all London
agents seem to be taking such a line. Yesterday, Peter Rollings, boss of Marsh & Parsons, said: "Property is
changing hands in record time and for close to, and sometimes above, the asking price. We currently have 18
buyers registering for each available property and there is no sign of this slowing down." Agents both inside and
outside London will have their own take on this, but it would certainly appear London agents will have an uphill
battle to persuade sellers that there is no bubble and to lower their prices, judging from another recent article.
The columnist, who lives in London, says that prices on his home turf are mad and that the bubble will burst
because they always do and its no different this time.
Simon Lambert also says that Rightmoves reporting of new asking prices in the capital going up 10% in a month
rings true with him. He says that where he lives (north London), people are not only asking high prices but getting
His local grapevine is, he says, a steady dripfeed of wildly optimistic estate agent valuations, which translates into
properties being put up for sale and near-asking prices being accepted. Things have gone bonkers even by the
usual standards of Londons over-inflated house prices and rents, says Lambert.