The news this week from Zoopla that house prices are once more on the rise will come as a shock to many homeowners who have had their homes on sale for many months and despair of attracting offers anywhere near the asking price.

Out of kilter

Thousands of households across the UK are getting cheap home insurance quotations on a property they thought they would have moved out of months ago, simply because they cannot sell their home at a price that will enable them to finance their planned move. The news from Zoopla seems highly surprising when comparing it to recent reports from institutes such as the Council for Mortgage Lenders (CML) who noted that home loans are at record low levels and the Royal Institute of Chartered Surveyors (RICS) who reported that sales and house prices have been stalled all year and forecast more of the same for the rest of the year.

Top end of the market driving price rise

According to the report house prices on average have risen over £200 a week throughout 2011 with houses at the luxury end of the market being the main driving force. Apparently families looking to purchase new household insurance on four and five bedroom homes are prepared to pay premium prices in most regions of the UK. The reasons behind the resurgence are put down to a number of factors with low interest rates, the weakness of the UK currency attracting overseas investors, plus the inevitable effects of supply and demand being seen as the major contributors.

Big difference between asking price and sale price

The report has been greeted enthusiastically by some in the industry but not all will be immediately seduced by the promise of a new dawn. It is difficult to pinpoint whether the report is based on sale prices or asking prices and as everyone in the industry knows there is a massive difference. The London housing market is without doubt buoyant at the moment but elsewhere there is a different story to tell. Vendors new to the market have read reports of falling house prices for months on end and a conversation with anyone who has had their home up for sale at any time over the last 12 months will have confirmed their worst fears. There are not many buyers around and those that do make a bid put in an offer well below the asking price.

Phoney market

It is not all impossible that we are seeing a market where buyers are bidding low, and to compensate vendors and estate agents are inflating valuations. So we get to a point whereby house valuations are going up by the day and bid prices are going down. It creates a phoney market and impedes the selling of property. Unfortunately it is possible that the UK market has now come to this point, the next few months will probably show us what is really happening.