The "remarkable" rebound in the London property market has lifted prices to record levels in five boroughs, a new survey reveals today.
The recovery has astonished property professionals, as some had thought it could be a decade before values reached their pre-recession highs.
However, record low interest rates, a shortage of flats and family houses for sale and a surge in interest from European buyers has pushed prices up far faster than predicted.
The most spectacular recoveries have been in central London, with February prices in Westminster now almost 10 per cent higher than their previous peak in July 2007, according to Land Registry figures.
Next comes Kensington and Chelsea, with a 6.5 per cent rise. The other three boroughs now at all-time highs are Camden, Hackney and Hammersmith & Fulham.
The capital's sharpest rises of all are in traditional "hot-spots" favoured by cash-rich foreign buyers. These include Chelsea, Knightsbridge, Kensington, Holland Park, Notting Hill and Pimlico.
In the latest wave, wealthy Greeks have been flooding into the London property market to take their money out of their stricken home economy.
In a further 15 boroughs, prices are now within five per cent of their peaks just under three years ago.
Peter Rollings, managing director of agents Marsh & Parsons, which commissioned the research, said: "Villages such as Battersea or Clapham, which are popular with young families, have also recovered steeply because property for sale has been in such short supply.
"But that is now changing, with more property coming on to the market in the expectation of a VAT rise after the election.
"That is not a bad thing because the last thing the property market needs is another bubble developing. A slow and sure recovery is better than an overheating one."
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However, the surge has raised fears of a second crash if interest rates go up sharply or the economy dips back into recession.
Neil Stephens, head of mortgages at brokers the Welbeck Group, said: "The market could be volatile over the next six months with the uncertainty of the political situation and whether or not there is a hung parliament.
"It will be a rocky ride even in the best of areas."
Cashing in on a 'remarkable' rise
Mark Baker hopes to exploit a bounce in house prices in Islington to buy a holiday home outside London.
The 37-year-old research consultant has just put his six-bedroom Victorian terrace home in Beversbrook Road on the market for £1.15 million — the same as it was worth at the height of the property boom in 2007.
He said: "The market has recovered dramatically in my area. I want to downsize to a smaller place, probably in Camden, and I hope to release equity and use the surplus to buy a little holiday home."
Mr Baker, who used to work in the City, bought the house in May 2000 for £465,000, making a 147 per cent profit in 10 years. He added: "A year ago it was valued at £950,000 to £970,000. The market seems to be up more than 15 per cent in my area in the past year, which is remarkable."
Felix Allen
