FT: Big City bonuses fuel 'gazumping'

Big City bonuses fuel 'gazumping'

By Sharlene Goff

Financial Times
Published: February 3 2006 22:14 | Last updated: February 3 2006 22:14

Estate agents are reporting the highest levels of "gazumping" for a
decade in prime areas of London as a drought of properties and bumper
City bonuses fuel competition among buyers.

Douglas & Gordon, which runs 23 offices across London, said as many as
one in three properties was attracting multiple offers, with about one
in five buyers being gazumped.

Hamptons International, an agency with 70 UK offices, said gazumping
- where a vendor rejects an accepted offer in favour of a higher
price - was happening more in London now than at any time since the
mid-1990s.

Top-end properties across the capital are going for 5-8 per cent more
than the asking price, compared with discounts of up to 7 per cent of
the asking price last year. Another agency, Savills, has also seen in
recent weeks a jump in gazumping in south-east commuter belt
properties. Buyers in the final stages of purchasing a high-value
property could lose up to =A310,000 in legal fees and survey costs if a
transaction falls through.

Demand for such properties has risen to exceptionally strong levels in
recent weeks as City workers have been raking in record bonuses and
there is renewed confidence in the housing market.

Hamptons is seeing 84 per cent more demand than at this time last year
and says buyers are battling for 18 per cent fewer properties. The
agency registered more than 2,000 new buyers in London last month.

Buyers are competing for properties worth at least =A3500,000 in
exclusive areas of London, including Knightsbridge, Islington, Chelsea
and Hampstead, as well as sought-after areas outside the capital, such
as Cheltenham and Oxford.

The problem of gazumping is being compounded by unusually low levels of
properties coming on to the market, as vendors last year delayed
selling for fear of weakness in the market.

"The normal situation of having more buyers than sellers at this time
of year has been massively exacerbated this time due to the negative
publicity of property prices," said Ed Mead, director at Douglas &
Gordon.

The latest figures from Nationwide, the UK's largest building
society, showed annual house price growth of 4.4 per cent, but agencies
say prices at the top end of the market have risen by as much as 15 per
cent.