Recently a family put their house in a London suburb up for sale at the highest of the valuations given by several agents. The husband felt sure that it would not fetch this price: he did not actually want to move, although his wife and children did. The house sold within days. This cautionary tale of our times sums up the state of affairs in the capital, where house prices are being driven up by a shortage of stock. But as we explain in our half-year report on conditions in the whole market, midsummer is producing other surprises, some nice, some nasty.

Mortgages

The inequality of borrowing opportunity could be increasing, with more good deals than ever for the ultra-creditworthy few. As we report on the facing page, private banks are offering £1million-plus tracker loans at 1 per cent above the base rate. At a high street bank, an applicant seeking a £100,000 loan would be lucky to pay 2 per cent over base. But the flow of funds to borrowers of average means is improving and the 100 per cent loan - the boom phenomenon that helped to bring about the bust - is on the comeback trail. Places for People, the housing association, is making such mortgages available on its Wolverton Park scheme, near Milton Keynes. Has Places for People prepared a sanctimonious, but highly necessary, speech to spell out the risks, including the possibility of negative equity? We really hope so.

Rents

Any conversation among tenants now swiftly turns to who has recently negotiated the largest rent reduction. Cluttons, the estate agent, says that London tenants are “calling the shots”, demanding discounts - and to know that landlords are not in mortgage arrears. It's common to meet a twentysomething who is now paying £200 less each month, which is equivalent to a £3,000 annual pay rise (before tax).

The latest survey from the Royal Institution of Chartered Surveyors indicates that this tenant assertiveness is set to continue throughout the UK. The pace of decline in rents is slowing, as there are fewer “accidental landlords” renting out properties because they cannot find buyers. But separate research from the Association of Residential Lettings Agents shows that other landlords are snapping up bargain properties. This will bring extra supply to the market, meaning that tenants will continue to flex their muscles.

Auctions

The new fear of being gazumped is one reason why more people are attending auctions. Many unconsciously cite that controversial 1970s credit card slogan: “It takes the waiting out of wanting.” Buying at auction is swift, but a canvass of views at a Savills sale this week - the busiest this year - also revealed that the British seem, once more, constitutionally comfortable with property as an investment, especially given the negligible returns on deposit accounts. One man, for example, spoke of his plan to acquire a property for each of his 13 grandchildren. There was also evidence that more people felt able again to get in touch with their inner developer. A derelict house in Forest Hill, London SE23 (pictured), with a £50,000 guide price, sold for £160,000. A building in Blackheath, London SE3, (guide price £350,000) went for £775,000. Both lots had “redevelopment potential” - a phrase that we have not heard for some time.

Negative equity

This is a phrase that we have been hearing a lot this week, after some depressing research from Fitch, the credit rating agency. This reveals that Sunderland SR1 is the UK's epicentre of negative equity; more borrowers here owe more than their property is worth than anywhere else. This dubious claim to fame is partly a result of the proliferation of poky apartments, which, as in other cities, have shrunken in value. In 2005 apartments in River View, one such block, were fetching as much as £180,000; today one is on sale for £88,895. The human misery and blight to neighbourhoods caused by the overbuilding of “executive” apartments is one episode of the boom that should not be repeated.

Flood and subsidence

Warnings that the forecast heatwave could cause subsidence came after alerts about the tide of trouble that results from flooding. Homeowners may be feeling that there are only so many puns they can take.

But homes in flood plains have suffered above-average losses in value, and subsidence can cause similar damage. Anyone who lives in a “shrinkable clay soil area” - in other words, subsidence central - should check for warning signs, such as cracks near windows. Should you have no idea whether your house is built on clay, Halifax says: “If soil can be rolled into a ball easily, it is likely to have a high clay content.”

These checks are particularly important if you are thinking of putting your home on the market, as buyers could use them as an excuse to drive down the price - which would really leave you with a sinking feeling.

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