“London is a victim of its own success,” says Liam Bailey, head of residential research at agents Knight Frank. “It keeps breeding demand.” At an annual rate of 15.6%, house prices in the capital are rising faster than anywhere else in mainland Britain.

The most dynamic part of the market has been “prime central London” – Knightsbridge, Belgravia, Kensington, Chelsea and Mayfair. “Knightsbridge is still booming as the place to live in London,” says Hugo Chance, an agent with The Buying Solution, a property-finding company. “It has risen by 50% in the last six months.”

Drop below £1m, however, and there are signs things are beginning to cool. “Sentiment has shifted from it being a sellers’ market to a finely balanced market,” says Ed Mead, director of agents Douglas & Gordon. “The enormous increase in prices in the more ordinary streets in Battersea, Clapham, Balham and so on might quieten down. The exceptional prices for some of these properties may not be seen for a while.”

Average property price: £333,785

Annual increase: 15.6%

Predictions: Prime central London will continue to set the pace, with annual rises of 10%-15%, says Mead. Knight Frank expects prices in London as a whole to rise by 8%

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