TALKING PROPERTY:CHATTING WITH a London estate agent as he reminisced about the "decisive" Irish buyers who were "very jolly and amusing", I felt obliged to inform him that these days, we were no longer quite so amicable and entertaining.

Not having bought or sold property in London since spring 2008, I’ve recently had to get myself back up to speed prior to delving back into that market on behalf of clients. A lot has happened over the last two years but the London market is proving resilient.

Land Registry figures show that the volume of sales in central London in 2009 was only 5.3 per cent higher than sales recorded in 2008. And sales levels in 2008 were less than half the average of the decade.

However, the first three months of last year recorded the lowest number of sales transactions for more than 20 years, as homeowners became reluctant landlords in preference to selling in a depressed market.

This resulted in an oversupply of properties on the rental market and a shortage of sales stock which, in turn, resulted in a sudden and very noticeable lift in property sales prices in the second half of last year. Strong sales results encouraged sellers back into the market and the first quarter of 2010 has seen a 34 per cent increase in stock coming on to the sales market compared with the same period last year. Yet, despite this increase of available properties, demand still outpaces supply.

Liza-Jane Kelly, sales director of Marsh Parsons, having predicted the market lift, now welcomes the recent increase in supply of new property to the sales market which, she claimed “is just about the only thing which will curtail the rise in prices”. The surge in sales activity prior to the end of the stamp duty holiday on December 31st, 2009 led to a brief slowdown in January, further compounded by particularly bad weather.

Since then, British chancellor of the exchequer Alistair Darling introduced a two-year suspension on stamp duty for first-time buyers on house sales up to £250,000 and increased the rate by 5 per cent on homes valued at over £1 million from April 2011.

Rightmove noted 105,784 new listings in March, an increase of 15,769 on its February figures. Although these numbers are still 26 per cent lower than the average pre-credit crunch levels, sales figures for February were the most prolific recorded over the last two years. Central London attracts huge numbers of international property buyers, particularly to smart areas such as Knightsbridge, Chelsea and Kensington.

I decided to concentrate my investigations in these areas, as they would provide a good indicator of global recovery. Historically, property in the Royal Borough of Kensington and Chelsea is the last to drop in value and the first to lift again.

And as Spencer Cushing of J D Wood’s South Kensington office explained, history was repeating itself. “On the good properties, we’ve recovered everything we’d lost. Indeed, we’d recovered most of it by the end of last year. If anything, the market has been stronger for this first quarter of 2010 than we’d anticipated. We’ve agreed a few unprecedented prices recently on quality properties where we’ve achieved competitive bidding.

“Clients from Russia, Asia and China tend to gravitate towards Knightsbridge but our market in South Kensington is very European. With the Lycée on Cromwell Rd, this area attracts a lot of French clients and recently we’ve seen huge numbers of Italians because their tax amnesty allowed them to declare offshore accounts and only be charged 5 per cent tax on their assets. Mainly cash buyers, some are now borrowing between 20-50 per cent, as interest rates are so low at the moment.”

Andy Buchanan has been selling property for 38 years, 20 of them as manager of the Chelsea Green office of J D Wood. Having worked through a number of recessions, he believes that “the market is dictated by the quality of available property”.

Buchanan noticed a dramatic increase in activity last June and since then, the quality of housing stock has been continuing to improve, as homeowners realise they will now achieve strong sales prices.

Muir Morton of Chesterton Humberts, South Kensington, agreed and said: “February to June is traditionally a strong time for property sales, although last year it was the opposite – the early part of the year was very bad and it improved in the last two quarters. This year, many may hold off buying and selling until after the general election.”

In its Chelsea branch, Giles Cook said he’s been busy for the last six to nine months as 50 per cent of his buyers are from overseas. Its Moscow office noticed that, apart from the oligarchs, there has been an increase in the number of Russians buying well-located one-bedroom flats as rental investments. “A combination of factors have driven up property prices of late, including the value of sterling, pent-up demand and shortage of stock. It’s staggering that we’ve had a complete reversal in 12 months.” All London needs now is the return of a few Irish investors and the rosy picture will be complete.