House prices are up and the number of sales is rising, but homebuyers who are desperate to move are emptying the market. A rise in orders for sold boards from estate agents, against a much smaller increase in requests of for-sale signs, is the latest proof of the squeeze on stock.

Based on the number of sold signs ordered by estate agents, there was a 13.4 per cent rise in sales between September and October, against a 5.6 per cent rise in for-sale signs, according to Agency Express, which supplies 90 per cent of the biggest agents.

In the South East, orders of sold boards indicated the greatest regional monthly rise in sales, at 39.4 per cent in October. This was against a rise in for-sale board orders of 1.8 per cent. The region with the next biggest increase in sales was the East Midlands at 35 per cent between September and October, which more than offset a 17 per cent rise in for-sale board orders.

Estate agents described the shortage of properties to meet demand as a vicious circle that threatened to cause the market to seize up. Housing analysts had hoped that recent price rises would entice more sellers into the market. However, evidence suggests that improved conditions have not yet had the desired effect.

The number of properties for sale per agent fell between September and October, from 62 to 57, according to the National Association of Estate Agents. There are now five buyers for every seller.

Agents believe that the increase in successful transactions against fewer instructions is a sign that homebuyers are growingbecoming increasingly desperatein the face of dwindling stock and will now even consider “stale” property that has been on the market for several months.

Jeff Shorter, of Paul Jeffries, an agency in Southampton, said: “People might want to sell, but they look at the amount of property around to buy and think they wouldn’t be able to find anywhere they want so they wait.”

The imbalance between demand and supply, especially in London and the South East, is behind the recent price rally. Halifax said this week that house prices rose by 1.2 per cent in October, while Knight Frank, the agency, said that prices in prime Central London increased by 2.1 per cent. Across Britain, prices are 7.1 per cent higher than their April trough, compared with 10 per cent in London.

Although price rises have been less dramatic for “bread and butter” homes in the regions, sales are progressing at a similar rate in some areas outside of London, according to analysts. Richard Donnell, of Hometrack, the property consultancy, said: “Stuff is shifting even in the middle market, the bread and butter market of half decent homes at a half decent price in half decent areas, because of the level of pent-up demand.”

Southampton has seen the biggest increase in sales in the country, with a rise of 62.5 per cent monthly rise in sold board orders in Octoberas homebuyers mop-up existing stock, versus a 4.6 rise in properties for sale. Nottingham was the second highest, at 60.9 per cent. Agents here thought the rise in transactions was a result of more appropriate pricing. Lorraine Giddings, of Nottingham Building Society, said: “We have persuaded vendors to accept realistic pricing and we have experienced record months that have defied all expectations for the last three months.”

The only region where transactions slowed down is the North East, according to the index, where orders for sold boards fell by 10.9 per cent.

The house-hunting tribes

THE SUBSIDISED

Call it an “inter-generational ‘loan’” or a “bung from the parents”, but whatever name you use, it is the route on to the housing ladder for four out of five first-time buyers in their twenties. Most mortgage lenders prefer borrowers with large deposits — at least 25 per cent of the purchase price. This means that a couple aspiring to a £249,000 flat in Shepherds Bush, or anywhere else within easy reach of Central London, would need a deposit of £62,500 or parents with the willingness and wherewithal to assist. But with negligible returns on savings, many are happy to lend at a modest rate of interest or even take a stake in the property.

THE PRADA PRINCESS

Rich Italians are flat-hunting in Chelsea. This “rampage” (in the words of one estate agent) around Sloane Square by people in Prada jackets and Persol sunglasses has been encouraged by Italy’s tax amnesty. Anyone who comes clean about savings that have been stashed in a tax haven will pay tax at 5 per cent on this money rather than the usual 40 per cent.

Their ideal property is, according to Ed Mead, of Douglas & Gordon, “a two-bedroom flat worth up to £1.25 million”.

THE BONUS BUY

A house in Fulham with plantation blinds, chrome door furniture and olive trees on the step — for around £1.2 million. This is what a lot of thirtysomething bankers with growing families would like to buy with their bonus cash, if only there were more such homes available. The supply was exhausted in the early-autumn buying spree — a period in which boom-time conditions returned to the market in southwest London, with sealed bids and gazumping.

Prices are back at their 2007 level, and Savills estimates that £1.2 billion of bank bonus loot will be spent on property.

THE EX-URBANITES

“Equity maximisation” is one of the reasons why Londoners who previously sneered at Surrey suddenly start to extol its charms.

If your mortgage is much less than the property’s value, you are in a highly fortunate position and will be welcomed with open arms by most lenders if you decide to move out of town. A detached house in Esher will cost around £1.2 million, but you’ll get more than 3,000 sq ft — three and a half times the size of an average house — and it’s not hard to get permission to demolish and build something even bigger.

THE MID-LIFE INVESTOR

Property auction rooms are full of this kind of person, hoping to snap up a bargain that can be rented out to one of those would-be buyers who cannot get a mortgage. These investors would rather entrust their cash to bricks and mortar than to traditional pension plans.

The typical yield from a rental property is around 5 per cent — higher than the return on a deposit account — although being a landlord does entail costs and legal duties. Nevertheless, these investors pore over auction catalogues in the hope of finding a gem. However, such is the demand for homes that properties are sold before the auction date.

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