Rumours that investment bankers are shunning property as an investment for their bonuses have been exaggerated, according to leading estate agents. Bonuses may be down, but City executives are preparing to spend - as before – on prime metropolitan and rural real estate.

Savills estimates that £2 billion will be invested, less than half of the record £5.5 billion splashed out in 2007, but such is the scarcity of supply in the smartest postcodes that price levels are unlikely to fall, despite the slowdown nationwide. Indeed, Ed Mead, of Douglas & Gordon, believes that because of the dearth of homes for sale, large bonus-financed transactions will have an even greater influence on the market’s direction than in previous years.

According to Neil Chegwidden, of Cluttons, prospective buyers looking for a bargain are in for a shock: vendors are rejecting opportunistic offers. “Buyers are chancing their arm, but they are not getting away with anything,” he said.

Last week, as Knight Frank revealed that the prime Central London market continued to move upwards in December, estate agents said that City buyers were readying themselves to compete with international demand for the best homes in Chelsea, Notting Hill and Mayfair. City executives who are to receive their bonus in shares that cannot be redeemed must be looking on in envy at the Goldman Sachs employee who has contacted Strutt & Parker Lane Fox with a view to splashing out as much as £8 million in Belgravia.

Even the biggest cash bonus will go less far this year. Anyone shopping for a home with £1 million or more will be able to buy 25 per cent less space than a year ago, according to Savills. This is the result of prices rises up to 30 per cent in Central London.

There is evidence of a change in habits among City househunters, however. Lulu Egerton, of Strutt & Parker Lane Fox, said that some of her clients will be using their bonuses to repay past mortgage debt, obviously aware that the credit crunch will not allow them to borrow on such advantageous terms this year.

Buying property close to the office is also a trend. Docklands developments in areas such as Shad Thames, on the south side of Tower Bridge close to the popular Bankside, but also handy for the Square Mile and Canary Wharf, are in demand.

Carl Davenport, of Chesterton’s Tower Bridge office, said: “On Saturday, we were suddenly packed to the gunnels with viewings. We couldn’t fit any more in.” One client has recently exchanged contracts on a £2.5 million Conran-converted 3,500 sq ft warehouse apartment, the highest yet paid for a flat in this neighbourhood without a view of the River Thames.

Some agents have noticed a more cautious approach among their investment banker clientele. Dawn Carritt, director of Jackson-Stops & Staff, said: “Last year, bankers seemed to be very brash about putting their bonuses into property. This year they are being a little more coy about buying.”

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax