A number of different London-based agents are reporting a far stronger start to the year than they had originally envisaged, with Lane Fox, Hamptons, Foxtons and Townends all reporting high levels of activity in the market.

Lulu Egerton of Lane Fox is confident that resurgent purchaser confidence in Central London's residential property market will make for a strong first quarter to 2002: "Although the market showed signs of recovery in the final quarter of 2001, with almost twice as many properties selling in November as in October, January has been even busier. Purchasers, relieved to have held onto their jobs and eager to make use of lending rates that are the lowest for nearly 50 years, are active. Viewing levels are up four-fold on December, with between 25 to 40 buyers visiting each property.

"The lack of supply across the board has resulted in the supply versus demand ratio squeeze, making for keen competition. Offers are being made at, or within striking distance below, of the asking price, although we have yet to witness offers in excess of the guide. We anticipate a robust first quarter to 2002 in Central London and, at present, do not see any reason why demand should fall off in the second quarter."

Peter Rollings, managing director of Foxtons was even more enthusiastic, saying: "The market's taken off. London has started with a huge bang. It's the busiest market I've seen for a long, long time."

Speaking to Reuters, Rollings revealed that around 1,500 house-hunters had registered at Foxton's London branches in the first week of the New Year, and around 2,000 in the second, with 136 properties sold last week compared to a weekly average of between 90 and 100.

The Townends Group, which has eight London branches, said sales had beaten expectations by about 30 percent. Managing Director Tony Addinall said: "It's frantic and sales are much better than anticipated. Levels of enquiries are 50 percent up on what we would have expected for this time of year."

The news will come as something of a boost after the lending restrictions announced this week by NatWest and Alliance & Leicester raised fears that prices in the capital could be hit by a fall in demand if the entry point to the market was made less attainable for first time buyers.