Sparked by reports of the fastest annual increase in national house prices for three and a half years, alarming headlines about a housing price bubble have appeared more frequently in the mainstream media over recent weeks.
When the Office of National Statistics revealed last month that the average UK home now stands at £254,000, a 6.8 percent hike over the year, it wasn’t perhaps surprising. However, the huge hikes appear to be confined to the property hotspots of London and the South East. If you take those out of the equation then prices have increased by a much more sensible margin.
There’s no doubt that the London market in particular has become detached from reality with the average house price surging to £414,356, up by 13.8 percent over the year to February. The ripple effect is being felt across the entire South East as demand outstrips supply.
This has led to a new phenomenon – the so called ‘ghost gazumping’ where would-be buyers are being gazumped by non-existent rivals as sellers with whom they have agreed terms raise the price of the property at the last minute. It’s a worrying trend and one that has not been around before, even in the heady times of the mid-noughties where property buyers would often by gazumped by rivals stepping in with a higher offer at the last minute.
‘Ghost gazumping’ appears to occur several weeks after an initial offer has been accepted. With enormous demand for a small number of properties, sellers are increasing their price despite there being no rival bidders and buyers are forced to fork out the additional cost simply to avoid having to start the home buying process all over again.
This worrying trend is clearly bad news for those clients in London and the South East in particular – and of course it could spread to other hotspots as demand outstrips supply giving greed the opportunity to win the day. It’s not just a case of possibly losing out on what they had planned to be their future home, but also cost them hundreds if not thousands of pounds on surveys and legal fees. In these hotspots, it is worth discussing insurance policies that protect your client’s pocket against the perils and pitfalls that come with buying a home.
Our Home Buyer’s Protection for example will not only cover your client’s expenses if they are gazumped by an offer of £1,000 or more, but will also cover your client if someone in the chain gets cold feet or if their own circumstances change, forcing them to withdraw due to illness or personal/family reasons.
And of course there is always the risk of the unexpected. A Royal Mail lorry ploughed into a house in the New Forest last month causing thousands of pounds of structural damage. The couple who owned it had just agreed its sale and had put an offer on another house. Our policy would cover them if the purchase fell through as a result.
In an uncertain market, peace of mind can be invaluable. Insurance such as Home Buyer’s Protection can deliver that peace of mind.
Brian Coulton, National Sales Manager, Source Insurance
