Property agents in London have reported a record gap between asking prices and actual sales prices. According to analysis by agents Douglas & Gordon, which compared the asking prices on the Rightmove website with those logged on the Land Registry, there is now an average £79,000 gap between the two figures.

This compares with a gap of £6,574 in 2003. Buyers now routinely offer £50,000 or more beneath the asking price, knowing that there is sparse competition for assets. The £79,000 figure represents 24 per cent of average asking prices and – says Douglas & Gordon – helps to explain why the London market has been so quiet in recent months.

“There is so much self-worth wrapped up in the value of your home that people feel it is social suicide to admit that it is worth less than they paid for it. They are not forced sellers because of low interest rates. So what we are left with is a lot of unrealistically-priced properties overhanging the market,” says Ed Mead and D&G.

The result is a stalemate, where buyers will only go ahead if sellers capitulate to wildly low and optimistic offers, while sellers dig their heels in and refuse to compromise. It makes the whole property buying process more like a game of poker: who is bluffing and who is telling the truth?

Agents really are earning their wages these days, as the flow of transactions continues to decrease and buyers evaporate due to lack of mortgage finance or losing their jobs, or some other affliction.

Conditions are almost certain to revert to normal before long, but it does mean that the traditional London dinner party conversation based around ‘Aren’t house prices crazy?’ (meaning that they’re soaring) has been replaced by an awkward silence, followed by a sheepish admission that you’ve just accepted a cut of a quarter of the property value, equal to an entire seven year set of private school fees for little Sophie.

Original comment can be found at The London House Prices Advisory