www.guardian.co.uk

Gazumping has made a comeback in some London property hotspots as it emerged that the capital's house prices are rising at their fastest rate for almost seven years.

In its latest monthly report, the Royal Institution of Chartered Surveyors said the strength of the housing market was being fuelled by a "booming" City economy. Many bankers and traders are buying properties in anticipation of the bonuses they will receive in the new year.

Rics said in some of the more desirable areas there was evidence of a return of gazumping, when a seller ditches an agreed buyer in favour of a higher offer.

Charles Puxley, at Chelsea estate agent Carter Jonas, said: "Prices are surging because demand far outstrips supply. This is encouraging gazumping, unfortunately, and many agents are grossly overvaluing properties in order to get instructions."

James Scott-Lee, at Anscombe & Ringland in Highgate, north London, said some properties were selling for "fantastic" amounts. "Every property tends to gain two or three buyers which subsequently goes to sealed bids."

Another London agency, Bective Leslie Marsh, said "hugely inflated prices" were being achieved at the top end of the market. However, agents in some London areas said the market had slowed down.

Prices in London are rising at their fastest rate since January 2000, said Rics. Elsewhere, a "ripple effect" was taking place across the country, with house prices in the north-west and East Anglia picking up sharply, while Wales, Yorkshire and Humberside also recorded rises.

Across the country as a whole, property values rose for the 11th consecutive month in September, at the fastest pace for four years. New instructions to sell homes fell for the fourth month in a row.

Rics spokesman Jeremy Leaf said that with stocks of property low and buyer inquiries increasing, sellers remained in a position to benefit in the short term.

"Continuing house price rises will make it difficult for the Bank of England to leave the base rate at 4.75%, unless the economy shows unexpected weakness," he said.

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