There is particular strength in the London market for one and two-bedroom flats and for three and four-bedroom houses. Buyers are paying more than £500,000 ($710,000) for good-quality two-bedroom flats in SW1, for example--up a fifth on this time last year.

'Many potential sellers probably don't appreciate their bargaining strength at present – and the fact that it is unlikely to continue for long,' said Leaf. 'Most housing market commentators seem to expect interest rates to rise later in the year which could reduce the number and purchasing power of serious buyers as well as the volume of sales overall.'

Despite reports of lower rents and fewer tenants, an increasing number of property investors, disappointed with returns from other investments, are forcing some first-time buyers to move to less expensive areas or rent until their financial position improves. Leaf also reports rapid sales of new homes. 'There are many developments in the London pipeline with growing waiting lists,' he said.