While recent interest rate hikes have placed a heavy financial burden on millions of Britons and reduced demand for housing, asking prices have continued to grow largely due to a shortage of supply, property search site Home's latest asking price index shows.
Asking prices jumped by 0.7 per cent in the last month, according to Home, although much of this growth is being driven by the London market, with rises in other regions reported to be more modest.
"The greatest contribution to this month's rise came from Greater London where market sentiment is very positive," confirmed Doug Shephard, Home's business development director.
"Asking prices in London increased by 2.5 per cent in the first quarter of 2007, although in most other English and Welsh regions house price rises are more subdued, being at or below the overall figure [for the first three months of the year] of 1.1 per cent."
Julian King, director of fast purchase property firm National Homebuyers said at their Affiliates Conference that lenders now offering as much eight times salary should be partly to blame. He said: "The sheer volume of people who are using National Homebuyers to avoid repossession or the knocking on the door of bailiffs is unprecedented.
"National Homebuyers provides a solution for people who want to move quickly and avoid the delays and uncertainties of selling the open market, but being a service solving people's financial problems, caused in part by their mortgage arrangement is staggering. This situation is very similar to 1989 and terms such as negative equity will become much used in conversation again."
Homeowners struggling financially following the rate hikes could consider selling their properties to National Homebuyers and then rent them back. Their sell and rent back solution, like an equity release plan, allows the homeowner to release capital in their home - for up to full market value - and then rent the property back. Further information can be found at www.nationalhomebuyers.co.uk/
