Property: Before the bubble bursts

As the London market peaks, now is the time to trade up, writes Penny Jackson

The knowledge that their home will go for a good price has not been enough to push some people into selling. They know they would then join a band of frustrated buyers. But some of those with vague plans to move are beginning to wonder whether now may be the time.

The traditionally slower summer months are only weeks away, there is a budget around the corner, and buyers may well be reaching their limits. In parts of London where prices have been driven up by a shortage of property, owners have watched with amazement as their homes have increased in value by as much as 30 per cent since the beginning of the year. Hesitation six months ago paid off, but to hang on longer could be a mistake.

Jane Brereton lives in Wandsworth, south London, which has seen some of the highest percentage increases in the country. In the autumn her family house, bought in March 1995 for pounds 205,000, with a further pounds 30,000 spent on it, was valued at pounds 270,000. In February it went on the market for pounds 345,000, and four offers were made at that price. It was withdrawn after the agents realised they had undervalued it and it went on sale again in March at pounds 379,000. The Breretons are to exchange this week at that price.

"Even though the house we wanted to buy had fallen through, we decided to sell. We couldn't afford not to, even if we have to rent for a while; it's the only way we will be able to buy a bigger house. Ours has gone for a silly price because there was so little on the market. We feel we've timed it just right," says Mrs Brereton.

In the fastest growing parts of London, there is a fine balance between achieving the highest price and keeping the buyers keen. Simon Agace, of Winkworth, has seen properties in areas such as W14 start to increase in value far more quickly than the expected 20 per cent in two years. A house in Abbotsbury Road that would have sold for pounds 350,000 in 1989 and for pounds 635,000 at the beginning of this year, has just been bought for pounds 680,000. "So do you value the next one at pounds 700,000?" he asks. "Or perhaps the agent will look at the number of people who want to live there and suggest trying pounds 750,000 or pounds 800,000."

It is a bad marketing ploy for a property to be reduced in price, and there are instances of houses having pounds 50,000 lopped off the initial sum. Certainly there is evidence of more property coming on to the market, which will see an end to the dramatic peaks achieved by competition. Already some cautious valuers are downpricing property, fearful of repeating the mistakes of the Eighties. Sara Graybow, of Hamptons International, has seen a few sales in south-west London lost through down-valuation. "It particularly affects the market up to pounds 200,000, where buyers are likely to be borrowing more heavily."

It is also making an appearance at the top end. Howard Elston, of Strutt & Parker, has just seen a pounds 2.75m house in central London down-valued to pounds 2m. "A compromise was reached in this case, but I am convinced the fizz is coming off the top. Some buyers are hacked off at paying ludicrous prices." He also regards the Budget as a possible factor in slowing price rises, especially if stamp duty and the tax status of overseas buyers are affected. Outside London, but where its buying power is felt, those people being offered large sums should consider selling, he suggests. "By the end of next month the bonuses will mostly be spent, and no one but rich guys in the City will pay some of the crazy prices in Berkshire and Hampshire."

Sensible buyers have to be sure they are making the most of a perfect sellers' market. Mr Agace explains the importance of the ripple effect. "Vendors in Hackney, say, should make sure their property is marketed in Islington. If an agent has a large number of applicants in a popular area it will affect its neighbours."

Also, given that volume of business rather than extravagant prices is the estate agent's bread and butter, sellers have to steer clear of over- zealous pricing. Trevor Abrahmsohn, of Glentree Estates, which specialises in north-west London, does not mince his words: "It is no good an agent pitching in with a high price then coming back on bended knee with a lower one. He is deceiving you, and is nothing more than a wolf in sheep's clothing."