Activity is surging in the heart of the capital, as May saw the highest monthly figure of offers accepted in a decade, Knight Frank analysis shows.
Meanwhile the number of new sales instructions during the month was the sixth highest in 10 years.
The trend is broadly similar across both prime central and outer London.
Tom Bill, head of UK residential research at Knight Frank, said: “The stars are aligning for buyers and sellers in the London property market, with supply increasingly able to keep pace with robust demand.
“For those wondering when this period of strong activity will end, it’s likely to last longer inside zone 1 due to the recession-proof qualities of prime central London and the fact a longer-term recovery is underway.”
Prices in prime central and outer London are on different trajectories.
Across outer London growth is moderating as the race for space becomes less frenetic, while in central London the market is still in the recovery phase after seven subdued years.
Meanwhile this trend is set to continue thanks to the return of international buyers, who still haven’t returned in meaningful numbers.
Knight Frank expects prices in prime central London to outperform most other UK markets in the next five years.
Andrew Groocock, head of sales for Knight Frank’s City, East and North region in London, said: “Our London sales pipeline is the biggest it has ever been and even exceeds the most frenetic periods of the stamp duty holiday.”
Prices in prime central London rose 2.4% in the year to May, which was the highest rate of annual growth since April 2015. In prime outer London, prices increased 4.8% over the 12-month period, which was also the highest rate of annual growth in more than seven years.
Underlining the scope for recovery, prices in central London are still 15.3% below their last peak in August 2015, while prices in outer London remain 7.8% below their last high in July 2016.