Tight supply is all that’s keeping house prices up.

We’ve all heard about high property prices in London. People are often concerned that higher borrowing costs might be a problem and the current LIBOR rate (the interest rate that banks charge each other when they lend money between themselves) of 6.88% means that in fact rates for new borrowers are highly likely to rise in the weeks to come despite Base rates being held at 5.75% in September. To make money, lenders have to lend money at more than £6.88%.

According to the Land Registry there were 413 properties sold in SW11 in the first six months of this year. There are 43 agents who claim to be operating in this part of London which means in theory that each has sold 10. Even if these figures were 100% out (why would they be?) it would explain why property prices in this leafy suburb have increased by 22% in the last 12 months. Demand is high and supply is tight!

Estate agents in Wandsworth have next to nothing on their books still and you can expect asking prices for what little does come onto the market to be eye watering as they compete for these jobs. Borrowing costs of an extra 1% mean much less to the man on the Clapham Omnibus – all he knows is that if he wants to keep his wife happy he has to bid strongly for what ever rubbish comes onto the market this Autumn. However, if demand dries up or more property comes onto the market then prices will slow even in this Shangri-La.