Average London house prices increased by 1% in February as confidence returned to the Capital’s housing market.

The average price of property in London is now £241,000 up from £238,305 in January, according to the latest data from haart estate agents.

High salaries, a shortage of good quality stock, record city bonuses and renewed confidence, particularly with first time buyers, have all contributed to boosting house prices.

The London housing market has had a very strong start to the year. After a period of realignment buyers are returning to the market with a 10% increase in buyers registering with haart estate agents since the end of last year and sales have soared by 26%.

Fewer sellers are having to hold out for an offer compared to this time last year as properties are selling quickly, with the average time to sell dipping to 19 days, the lowest since the survey began. As a result buyers are achieving a smaller reduction of asking price from 4.5% this time last year to 3% in February 2006.

Along with increased activity in the housing market there are strong signs that first time buyers are coming back with a vengeance with a further 1% increase in first time buyers to 25% in February.

% of London buyers who are buying their first property

Paul Smith, chief executive of Spicerhaart said, "Properties are being snapped up in record time due to the release of pent up demand in the housing market. The rise in activity along with the shortage of stock is pushing average prices even higher and we expect property prices to rise by over 5% in the first half of the year."

Overall the capital is currently outperforming the rest of the country in terms of the performance of the housing market. However there are hotspot areas within London. The South West is the best performing area with properties selling faster than anywhere else in the UK, with the average time to sell at 15 days and property prices increasing by 2%.