Most London home buyers 'think prices are unfair'

Around two-thirds of people looking to buy a home in London believe prices in the capital are above what is “fair and reasonable”, a survey has found.

The opinion gap on how realistic prices are in the current economic climate could lead to a stand-off between house buyers and sellers over the next few months, Rightmove’s survey suggested.

Some 65% of people living in London believe prices are higher than what is fair. Asking prices in the capital have risen on the back of strong interest from foreign buyers.

It compares to half of people planning to buy a home in the next year nationwide who believe property prices in their area are beyond what they should be, despite the property market generally being weak.

However, only a third of people who are looking to sell their home have the same view as buyers. More than half of them (56%) said the biggest concern was whether they would receive a “sensible” offer.

But even though buyers and sellers could not agree on prices, both were generally of the opinion that house prices would not fall as a result of their disagreement.

MyLondonHome.com director Andrew Griffith said: “Around 50% of buyers are from overseas and one of the reasons the property market is as healthy as it is in London is because of the number of foreign buyers compared to the rest of the UK.

“It pushes prices above what many typical Londoners may be willing to pay.

“It is a reflection of the amount of interest in central London, which has always been there but with the Olympics and the Jubilee celebration it is greater than ever.”

Griffith noted that other cities which have hosted the Olympic Games had seen property prices fall after the event left town.

He said: “If you look at other Olympic cities, such as Beijing, Athens and Sydney, their property markets have taken a dip after the Games. Whether that happens here in London remains to be seen.

“To our advantage, our property market is perhaps more stable and London remains one of, if not the most, attractive places in the world. We have that working in our favour.”

Seven out of 10 people from the survey of around 40,000 home movers in the UK said they expect house prices to be the same or higher this time next year. Just 24% believe prices will drop over this period.