London: Bubble or Burst

House price figures have been released for 2013, and show a whopping 8.4% increase across the UK, the biggest annual increase in property price since July 2010. The average house price has reached £175,826, with the majority of the increase being in London.

The increase can be attributed to the fact that the supply of property has far been outweighed by the demand, due in part to government schemes making purchasing property more feasible for many. This has caused bidding wars and as a result prices are continuing to increase, sometimes far beyond the amount at which they would normally be valued.

But how is this going to affect the future for those who are buying in London now? Is London a bubble? Are these prices sustainable, or is the bubble going to burst?

Whilst prices of residential and commercial property are rising exponentially, there is some positive news for buyers. Economists are predicting that interest rates will remain at 0.5% for the duration of 2014 (the first rise is planned to be coming in the second half of 2015), so mortgages can be fixed at the current highly affordable levels for a little while longer.

What are your thoughts or recent experiences in the property market? Have you used the government Help to Buy scheme? How easy did you find it to secure a mortgage? Did you take a fixed or variable mortgage? Have you been gazumped in recent months?