Bidding wars and gazumping are spreading out of London and across the UK, as desperate buyers scramble to get on the property ladder before prices rise even higher.
While the economy and consumer confidence are both improving, negligible wage growth means is already making property unaffordable in many areas, industry experts say.
The claims follow yesterday's Nationwide House Price Index, which showed prices rising 5.8% in the year and 1% in October alone.
James Hall, director of estate agents, Fishneedwater, said: “Words can't describe what's happening to prices in the capital right now. Bidding wars and gazumping are an everyday occurrence.
"This isn't just happening in London, either. Competition for property in many other areas of the country is rife. The market hasn't been this active since before the crash.
"People see the mortgage rates on offer and it's hard not to make the most of them. They’re too good to resist. There is around four to five years of pent-up demand and this has hit the market at the same time.
"In London, there's just not enough property on the market and this is driving prices ever higher and creating unheard-of levels of interest for individual properties."
Alexander Gosling, director of online estate agents Housesimple.co.uk said: "The house price revival continues apace. But how long is this going to last? And perhaps more importantly, how long should it last?
"Falling unemployment and an improving economy are making consumers more confident, while once-in-a-lifetime conditions in the mortgage market are enabling them to buy.
"But with wage growth negligible, if not negative, the way average prices are rising in some areas of the UK is bordering on the absurd. Affordability, in many areas of the UK, is already ebbing away.
"UK consumers are gambling on an economic recovery that is by no means in the bag and a property market that is being artificially propped up."
Andy Knee, chief executive of LMS, said high rents and low returns on savings are continuing to draw people’s attention towards property as an investment. "Mortgage rates have never been so low. If you are able to source the cash for a deposit and have found the property that you want, then snap it up before someone else does.”
Peter Williams, executive director of the Intermediary Mortgage Lenders Association, said the Help to Buy mortgage guarantee will give the market further impetus, pushing house prices even higher.
Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), denied the UK is racing towards a house price bubble. "Prices are rising from a low starting point and the national average is still 7% lower than the 2007 peak. The dizzying heights of London house prices do not necessarily apply to the rest of the country, painting a far less fatalistic picture than many would suggest.
“With mortgage rates at historic lows, it’s unsurprising that consumers are grabbing the opportunity to jump on the property ladder with both hands.”
Nicholas Ayre, managing director of homebuying agency Home Fusion, said people are desperate to buy a property before it's too late, but denied borrowers are overstretching themselves. "We are seeing a steady spread of LTV mortgages, so buyers do not seem to be maxing out on finance and are keeping within affordability boundaries.’
Comments
Many buyers have been let down by sellers when the seller accepts another offer despite having made an agreement of sale. This can be mainly attributed to the lengthy eight to nine week period, which makes the buyer vulnerable to out-bidders when no formal contract has been exchanged. ‘It is a supply and demand situation, demand is high, while supply is low – of course this leads sellers to actively seek and choose the highest bidder on their property’