The Bizzaro World of the UK Housing Market

The bizarre world of the UK housing market continues to unfold more like a suspense novel than a market supposedly balanced by the pull of supply vs demand.

The Rightmove index has shown that asking prices in London are currently higher than they were at the peak in 2007, which means higher than they have ever been before, a new record after climbing 6.5% in the space of less than a month. Asking prices apparently rose 2.5% across the nation.

There are a lot of reasons being bandied about as to why this has happened, including:

• The massive bonuses being talked about in the news after Goldman Sachs announced a $3.03 billion profit for the third quarter and RBS have been found to have £1.8bn put aside for staff bonuses. (for London)
• Sellers are attempting to "cash-out", to sell up while times are good and get the best price possible
• Estate agents having to inflate asking prices to win the precious few instructions on the go

Richard McKay, director of private property sales portal Zungalow.com believes it is likely a combination of more than 1 reason.

"I think there is definitely a little bit of opportunism at the moment, people have been hearing about the low supply pushing up prices for some months now and they think: if no one else is catching on we might as well give it a go. Then there are definitely agents out there, who, struggling for survival in a market with very few sellers are offering the world to those who consider it," he said.

"The whacky thing is, supply in London is so short on the top end properties that they may end up getting the asking price. Let's try to picture the headlines after London house prices rise 5% in October, no, in fact let's not," McKay added.

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