Price rises 'driven by vicious circle'

Continual increases in London house prices have been fuelled by a "never-ending circle" made up of buy-to-let investors eager to invest in property and young Britons simply looking to purchase their first home, one estate agency has claimed.

Ludlow Thompson has said that first time buyers' fear of being priced out of the market at a later date was the paradoxical reason for the continued price increases of the past 12 months.

Estate agents are now often turning to developers to see if they want to convert new houses into a series of flats, the firm added.

"The reason that prices have gone up so much in the last 12 months is that everybody's thought that they'd be priced out in the next 12 months so they jumped on the bandwagon," commented Alexander Rawlinson, sales manager at the Tooting branch of Ludlow Thompson.

"That fuels demand to increase and supply stays the same, and prices go up again."

"When a house comes on the market these days, a lot of estate agents' first port of call is the developers to ask: 'Would you be able to convert this into flats, and do you want to buy it?," Mr Rawlinson added.


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