On Christmas Eve, a wealthy man, about to receive a City bonus, clinched the deal to acquire a Kensington mansion. The mid-Victorian house in Phillimore Gardens, midway between Kensington High Street and Holland Park Avenue, had gone on the market in early December for £12 million. The successful bidder paid just above £15 million and handed over another £600,000 to the Exchequer in stamp duty. And in this manner was spent just some of the estimated £5.5 billion of bonus cash now being invested in bricks and mortar.

Another six people were vying to buy the Phillimore Gardens property which is handy not only for Holland Park, but also for the chic end of Portobello Road. It is described by one observer as “in the category of houses that you would kill to live in”.

It is not known whether these six disappointed parties were among the 545 people who, on Christmas Day, found time to surf the website of John D Wood, the estate agent that handled the sale of the house. But the scarcity of homes suitable for the top echelon of Square Mile and Canary Wharf workers means that buyers cannot afford to relax for a moment in the chase.

Meanwhile, steep price rises in such prime locations as Kensington also mean that those who will be pocketing more modest payouts over the next few weeks are opting for more affordable areas of Central London such as Bloomsbury. But now even these neighbourhoods are appreciating fast. Banbury Ball, the agents, recently sold a house in Doughty Street for £2,250,000.

Equally convenient Pimlico is another increasingly popular choice; but prices are starting to surge here too. A spokesman for the Pimlico branch says: “We recently sold two houses in the Pimlico grid for about £2 million, one to a lawyer and another to a banker. It doesn’t take much brain power to work out there’s a bonus in there somewhere in both cases.”

The shortage of impressive 18th and 19th century homes — for which not only City types, but also Eastern European oligarchs are competing — means that houses from the 1930s, a somewhat overlooked era, could be the next new big thing.

But the current new big thing for the recipients of bonus loot is the mini-estate, according to Liam Bailey, head of residential research at Knight Frank. About £2.5 million will buy you a substantial farm in previously “off-pitch” places such as the Welsh borders, North Norfolk, North Yorkshire and deepest Cornwall and Devon. Not within commutable distance of the City, perhaps, but the new member of the squirearchy can work from home for one day a week with the help of satellite broadband.

Nearly half the buyers registering with Knight Frank’s Harrogate office are from London and the South East. This agent’s country property registrations were up by 23 per cent last month on the same period a year ago. But, in Exeter, Worcester and Harrogate, registrations rose by close to 40 per cent.

Those not yet secure enough in their status to contemplate a rural fastness and homeworking, will be content to acquire a decent-sized family house within commuting distance of the City. This year, Peter Young of John D Wood discerns a distinct preference for West London. He explains: “The farthest north buyers wish to go is Primrose Hill. Otherwise they want to go west to Battersea, Wandsworth, Wimbledon, Chiswick and Richmond.”

Haart, the agents, highlights such specific neighbourhoods at Bedford Park in Chiswick, with its Queen Anne-style houses, and Peterborough estate in Fulham, where the value of some properties has gone up from £800,000 to £1,200,000 in 12 months.

Bonus recipients who are sanguine about a longer commute are also heading west, but only as far as the Cotswolds.

Rupert Sweeting of Knight Frank says: “The top-end buyers are looking for something with 50-100 acres, within two hours of London. For a place with seven bedrooms and five bathrooms, you can expect to pay from £2.5 million to £4.5 million. I’m taking lots of calls from buyers, but there is a desperate shortage of property.”

A place in the country is a glittering prize. But the ultimate object of desire for those benefiting from substantial seven-figure rewards remains the house in the capital’s rarefied zones: central west (Kensington, Notting Hill and Holland Park) and south west central (Knightsbridge, South Kensington and Chelsea), as new figures from Savills highlight.

Yolanda Barnes, director of research at Savills, says: “Houses in the central west area rose by 14.5 per cent in the last quarter of 2006 to finish the year up by 46.4 per cent. Houses in south west central saw a quarterly rise of 15.9 per cent, which means that annual growth was 39.5 per cent. Since flats appreciated at half the rate of houses, overall growth in prime Central London was 23.9 per cent last year.”

Anyone successful in the pursuit of a property can this year take advantage of a special Barclays loan package which allows anyone in line for a bonus to borrow £500,000 or more until the money is distributed.

Tom Tangney of Knight Frank says that many clients prefer to complete on their purchases after the bonus share-out, which means that they have no need for a mortgage. There is a time lag between the announcement of bonuses in the final weeks of the year and their payment between January and April.

The period between exchange and completion of a prize property may be leisurely. But anyone wishing to beat the competition in the dash for the perfect W11 villa cannot afford to shilly-shally. The attended exchange is one of the favourite weapons of the serious househunter. The paperwork, the searches and the payment of the deposit are sorted in one day, with the eager buyer in attendance.

High rise

£269,327 The average house price in London (Nationwide)

£1,377,188 The average house price in Central London (Prime Location)

£5.5bn The amount of City bonus cash expected to be spent on property (Savills)

12% Knight Frank forecast for growth in prime Central London market in 2007

81 The number of £2 million houses in London sold between September 2005 and September 2006 — an increase of 53 per cent (Land Registry)

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