'Gazumping is back', says Rics survey

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The Independent Online

Fears of a fresh bubble in the property market rose today after a housing body said gazumping - where sellers raise the price at the last minute - had returned.

House prices rose for the 11th month in a row in September, led by strong increases in London and the South-east, the Royal Institution of Chartered Surveyors (Rics) said.

Housing market activity has hit its strongest level in four years because of rising number of house-hunters, a bonus bonanza in the City and a shortage of homes, a survey showed today. Rics said prices in London were rising at their fastest pace since January 2000, boosted by a booming City economy. "Estate agents report that gazumping is taking place," it said. In the South-east, prices rose at the fastest pace since December 1999.

The number of surveyors reporting a rise in prices outnumbered those seeing a fall by 45.1 per cent, up from 34.9 per cent in August and the fastest since October 2002. New buyer enquiries rose for the 16th consecutive month, making the longest unbroken run of rises since Rics began collecting data in 1978. Meanwhile, the number of new properties coming on to the market fell for the fourth month in a row and at the fastest pace for two years.

"Continuing house price rises will make it difficult for the Bank of England to leave the base interest rate level at 4.75 per cent," Rics said.

The report will add to pressure on the Bank to raise rates next month. It came days after Mervyn King, its Governor, hinted he was worried about inflation.

Yesterday, Sir John Gieve, Mr King's deputy, appeared to firm up the hints of a rate rise. In comments he described as a "strong signal to wage-setters", he said: "We are determined to do whatever is necessary to bring it back to target over the next year or two."

Sir John noted there were widespread expectations of another rate increase after August's quarter-point rise to 4.75 per cent, but said: "We haven't made up our minds."

The price boom, which began in the South-east, has started to ripple outwards.

The upbeat tone of the report was confirmedby surveyors. "Due to lack of supply, some agencies are deliberately adding 10 to 15 per cent to the asking price," James Scott-Lee at Chancellors in Banbury, said.