I found this interesting post from House Price Crash that illustrates the delusionary behavour of some sellers in London:
SW London 3 bed Victorian Terrace - nice but not fantastic area. Owner has redecorated, fitted a better kitchen/bathroom - can't have spent more than about £35k 'improving' it. Bought 2005 for £450k On market for £800k - thats more than 75% increase in two years...
I bought a similar house in the same street for £137k in the mid 1980's .. Both missus and me earning a good wage and we only just afforded the mortgage.
My question if 2 professionals on a good salary (at least twice the national average at the time ) in their early 30's only *just* managed to pay the mortgage on £167k then who the fudge can afford £800k now??? It's only a small 3 bed, no garden front or rear - I can't see Russian millionaires piling in???
If anyone sees any prospective Russian homebuyers in South London, be sure to let everyone know.