The number of properties being sold above the asking price has hit its highest level in seven years, with house prices jumping £7,000 in just four weeks last month.
The boom has been triggered by Chancellor Rishi Sunak's stamp duty holiday extension, but while sellers are cashing in, experts fear a storm is brewing elsewhere.
Kirstie Allsopp said buyers could find themselves in a financial crisis in a few months’ time when property prices cool and interest rates start to creep back up.
She said many buyers may find they have overpaid, and, worse, that they cannot afford the repayments.
The property expert said the stamp duty holiday has created a mini housing boom as the government had hoped. It’s sent homes soaring in value due to a spike in buyers – but bidding wars are resulting in people splurging their hard earned money on over-rated properties.
Ina column in The Times, Allsopp said during filming, she recently saw a case where six people were bidding for a house that had barely been on the market a week.
The Location, Location, Location presenter said the tax holiday has fuelled a ‘scarily heated market’ that could be doing more harm than good.
“Back on the road making L,L,L on the North Wales border, in Cheshire around Wilmslow. In both places, the market is scarily heated. Given the fact that 17% of people are still on furlough and the economic impact of Brexit and Covid is unknown, this feels troubling,” she tweeted.
“Mediocre houses that people would usually turn their noses up at are being fought over,” she said.
“We have finally secured a house in south Manchester after losing out 4 times. Common for each house to have 4-5 offers, one even had 16 offers.
“It’s crazy atm! Booking viewings and not getting to see the houses as they are under offer before we get there and way over asking price (Scotland).”
She said instead of the usual few places to watch, suddenly everywhere has become a “hot market”.
And this has its concerns.
“Interest rates are likely to go up a bit at some point. Have would-be buyers calculated what that would mean for their mortgage repayments?,” she said.
She said people could find themselves blowing their entire wages on season tickets when the novelty of working from home ends.
“Then there is working from home. If people are making financial decisions based on the fact they will be saving £5,000 a year on a season ticket, that is premature.
“If people are called back to work in cities, their travel and daily expenditures will soar and the impact could be felt in the property market.
“I don’t want to be a drama queen, but people should stop rushing to buy homes. If someone asked me whether they should buy, I would say: “Don’t buy anything that will radically change your life.”
In a final warning, she said buyers should ask themselves three questions before speeding ahead - 1) What happens if I have to start commuting to the office again 2) what happens if interest rates go up a couple of points? And 3) Would the decision to buy still be the best one for you and your family?.
