Prime London ‘price bubble’ fuels new record asking price

London saw a 4.8% (+£21,834) jump in average new seller asking prices during October, the biggest monthly increase since the 5.2% increase seen in October of last year.

This reverses the Olympic-induced price lull over the summer, which saw asking prices of property coming to market fall by 4.4% between July and September. It also sets a new all-time high by £631, though this is very much driven by the prime London locations.

Miles Shipside, director and housing market analyst at Rightmove comments:

“This month’s jump of more than £21,000 in new sellers’ asking prices is partly a bounce after the Olympic-induced activity doldrums. Some Londoners, especially those in the upper price brackets, had the option or sense to delay marketing their properties. This means the falls seen over the summer months have now been recovered by the biggest monthly increase we have recorded since this time last year. This has resulted in a new average record high, beating the previous record set in June by £631”.

The weekly run-rate of fresh property stock this month is down by 3.2% on the same period a year ago, as many sellers’ remain unwilling or unable to come to market. The prospect of a few active selling weeks before the winter slowdown means estate agents are keen to attract fresh stock to try and land more buyers

Shipside adds:

“Agents attempts to stock-build for the autumn selling season could backfire if they agree to over-ambitious pricing to please a seller, as it could spoil a potential buyer’s enthusiasm to arrange a viewing if the property stands out as over-priced. However given the rising market in some parts of London, some sellers may feel it worthwhile to chance their arm.”

Prime London property coming to market at record asking prices is still a major factor. The most expensive borough, Kensington & Chelsea, hit a record high this month with new seller average asking prices now in excess of £2.2 million. The previous record in this borough was set in June, when the average was £2,140,232.

Shipside observes:

“There is a prime central London ‘price bubble’ that keeps on rising. While there remains a shortage of supply and a stream of foreign buyers looking for safe havens, then the bubble will continue to grow. It remains to be seen if the additional post-Olympic ‘surge’ of high-end property supply will cause a pause for breath in this heady rise”.