'Severe' shortage of housing stock behind record asking prices, but experts warn of property market's 'fundamental weakness'

Property asking prices in London have soared to a new high, breaking the record set in November 2007, as a “severe” shortage of stock continues to fuel rises, according to new figures.

Rightmove’s monthly survey shows the average asking price in the capital jumped 6.5% to £461,157 in the month to 10 October, significantly higher than the November 2007 record of £412,731.

Asking prices across England and Wales rose 2.8% in the past month, the largest rise since February last year. The average price now stands at £230,184, which is 0.2% higher than the same period last year – the first year-on-year increase Rightmove has seen since June 2008.

Miles Shipside, commercial director of Rightmove, said: “It’s a little bit crazy to have a sellers’ market given the time of year and the warnings of imminent fiscal austerity by all the main political parties. Agents in the north as well as the south are reporting that quality properties are often selling within the week.”

However, he warned that the apparently rosy picture concealed “fundamental weaknesses” in the property market and sellers should beware of “icy conditions” ahead. Political uncertainty in the run up to the election was likely to cause homeowners to pause before selling their houses, he added.

Any expectation that the housing market will speed to recovery may also be dampened by a report from the Financial Services Authoriy, out today, which is expected to outline plans for mortgage reform, including tougher credit checks and an end to self-certification deals.