Homebuyers beware: the sealed bid is back

The rebound in the housing market in London has led to the return of the sealed bid - a classic sign of a speculative bubble - a survey shows today.

House prices rose at the strongest pace for two years in February, according to a poll of the UK's biggest estate agencies and surveyors' firms. The biggest upturn was in the capital, where more than two-thirds of respondents saw a rise in prices, the Royal Institute of Chartered Surveyors (Rics) said.

An agency in Kensington said it had received 33 sealed bids for one property - all above the £1m asking price. Tim le Blanc-Smith, at the agents John D Wood, said: "Two years ago, for an identical property we only had two offers.

"The chronic shortage of suitable property for sale is continuing to fuel the market, with some vendors being handsomely rewarded - achieving premiums well above their asking prices."

This was echoed by agents across the capital's most salubrious areas. Benson Beard, at Bective Leslie Marsh in west London, said: "Frustrated buyers are either paying over the odds or giving up."

Gary French, at Friend & Falcke in Belgravia, said: "The lack of stock continues to increase values as demand outstrips supply."

Last month, another survey showed prices in "prime" London postcodes had hit an all-time high, while another highlighted a surge in foreign investment from China and the Middle East.

Rics said 17 per cent more surveyors reported price rises last month, compared with those who said there had been falls. It was the ninth month in a row that inquiries from potential buyers had risen, a record for the survey.

At the same time, completed sales were 17 per cent higher than a year earlier.