Only in “lunatic London” could someone with a budget of £500,000 be outbid on a succession of properties for which rival buyers were prepared to pay tens of thousands of pounds above the asking prices.
Clare Duffy, above, was unable to buy even an ex-council house in Peckham, a neighbourhood made famous by the Eighties sitcom Only Fools and Horses.
The housing market in London is at “fever pitch”, according to some commentators, who fear that possible overheating in the capital could spill into other regions, resulting in an end to Help to Buy and other schemes that aim to boost lending and home ownership.
House price growth is only just being registered in some parts of Britain while London recorded double-digit price rises last year, with prices apparently continuing to rocket in 2014.
This week Adair Turner, the former head of the financial watchdog, added his voice to those calling for the Help to Buy scheme to be reined in, saying it was a “step too far”. Help to Buy is a government-backed scheme aimed at encouraging banks to lend to those with small deposits.
But others have warned that while London’s prices might be rising too fast, the rest of the country needs the support of low mortgage rates and schemes such as Help to Buy. Figures published this week showed there were 23pc more first time-buyers in 2013 than in 2012.
The Council of Mortgage Lenders (CML) said an increase in first-time buyers helped the property market by encouraging more sellers, easing supply issues. Richard Sexton, a director of chartered surveyor e.surv, said: “Help to Buy is proving vital in helping buyers build the deposits they need to access the market. Buyers are moving now to capitalise on cheap fixed-rate deals. Lending to borrowers with small deposits is more important than ever.”
But rocketing prices in the capital are causing growing concern. There are anecdotal reports of homes going through repeated processes of sealed bids and fetching prices up to 25pc above the initial asking price.
Andrew Montlake of the mortgage broker Coreco said competition among buyers had reached “fever pitch”. Cases of gazumping, where sellers accept a higher offer after agreeing to a sale, were commonplace, he said. “We had one property that needed full refurbishment. It was on the market for £600,000 and, after 31 offers, it sold for £853,000,” Mr Montlake said.
“Properties are attracting around 80 viewings and 10 to 12 offers within two days of going on the market. We have lots of first and second-time buyers on our books who have secured mortgages but can’t buy because they keep being outbid.”
Miss Duffy, 30, has been looking to buy in south east London since November.
She put an offer in on a three-bedroom flat in Peckham Rye at the £450,000 asking price. The property sold for more than £490,000, almost 10pc extra.
She then found another property in the same area that needed significant renovation. The three-bedroom flat was on the market for £490,000.
“Given the amount of work needed, I put in a low offer,” Miss Duffy, who works in public relations, said. “I was encouraged by the agent to come closer to the asking price because the owners might prefer me as a first-time buyer with no chain.” She offered £485,000 but still lost out.
Miss Duffy found a third property, a three-bedroom ex-council town house, for which the seller sought in excess of £485,000. She offered £492,500 – only to be told the property was in a sealed bid process. Before she could submit another offer, the seller is understood to have accepted more than £530,000.
“The whole thing feels a bit farcical,” said Miss Duffy. “I wanted to try to stretch my budget but I am now revising that plan and looking for a two-bedroom property, many of which are going for over £500,000 – at least in the areas I like.”