Property: The price mechanism pricks sellers' inflated hopes

Some mortgage rates have risen this week and certainly in London and the South-east the property market has slowed down. But what does this mean to the regular buyer and seller?

The fact that the number of Far Eastern investors has tailed off does not help the person selling a four-bedroom house in Tunbridge Wells. Clearly the inclination for buyers to panic has gone. Homes are not selling as fast, there are fewer buyers around and a healthier supply of properties on agents' books.

This is partly seasonal, of course, but it all sounds far less stressful than the spring story when good property was selling within days for well over the asking price. The London estate agents, Winkworth, find that some vendors have not quite caught up with the current mood. "There are those who are only putting their own homes on the market after they have found something to buy, expecting it to move immediately. That is simply not happening," says Hilary Wade, a director. "It is not that we are seeing prices falling but that buyers are not prepared to pay silly prices for a property that has been over-valued."

Apparently, discerning buyers prefer a spectacular one-bedroom flat to a run-of-the-mill two bedroom. It may not be of much comfort for those families desperately seeking a good-size house, but the number of instructions for flats has doubled this year according to Winkworth.

Meanwhile, other London evidence comes from Trevor Abrahmsohn of Glentree Estates, who has noted quite a change from a few months ago, when "a full- priced property was snapped up by one or other of a frenzied group, open cheque books ready to do business".

Now the pendulum is swinging towards a more balanced arrangement of buyers and sellers. "We are now taking property on to our books at full prices which are remaining unsold. For the first time in recent months vendors are asking us why properties have not sold as they anticipated. Mostly this is due to overpricing by the sellers themselves."

In the country, according to the marketing company The London Office, the story is similar. Estate agents find one of the biggest problems is the over-inflated opinions vendors have of their homes. "Even though there is considerable demand for country properties of all types, prices generally are beginning to plateau but vendors still feel their property has a higher value than those being advised by our member firms," Bob Bickersteth says.

Spotting an up-and-coming area of London is a game everyone can play, some with more success than others. Savills Research has long tipped the Paddington area as ripe for growth over and above what is usual. Yolande Barnes, at Savills, believes the most crucial factor to be the high-speed rail link to Heathrow. Many people favour South Kensington simply because of its Tube connection to the airport.

She also points to the essentially good stock of housing which at present is more than likely to be a somewhat seedy hotel. It has already started to come up, but the stock has the potential to be prime, she says.

"Take Sussex Gardens, tree-lined with lovely houses - it could be absolutely beautiful. The area is also on the borders of the Hyde Park estate, Kensington and Notting Hill which is another big factor." Winkworths considers the area's gentrification inexorable and has opened a Paddington and Bayswater office. "There are little mews houses and flats and the colonisation of the better-known estate agents can increase the supply of stock, which is very short there," Ms Barnes adds.