If you wanted proof of the runaway strength of the top end of London’s property market, then look no further than 10 Hertford Street. In March, the house just around the corner from Park Lane’s Hilton was sold for £6m. Eight months later, it is back on sale with Beauchamp Estates — this time with a price tag of £14m.

Or look at Montpelier Street, South Kensington. A house there with planning permission for nine flats was bought for just under £20m in March and sold on in June for almost £26m. Or what about nearby Kensington, where a five-bed villa was bought last September for £6m and is now back on the market for £11m? With prices hitting new highs, a group of multi- millionaire speculators are finding the London market a certain bet. Even with stamp duty and estate agents’ fees, it is easy to make a handsome return by buying, waiting a few weeks and selling on.

“Like most markets that go well, there is a hard core of shrewd operators who have been doing it for years, and others who are jumping on the bandwagon,” says Peter Rollings, managing director of Marsh & Parsons, an estate agency in central and southwest London. “This year the bandwagon is pretty big.

“If you have something special for sale, you can almost name your price. There is an extraordinary amount of money around.”

It is not just the super rich who are at it. There is money to be made further down the property ladder as well. Take Baljit Chema, 32, who runs his own risk management company, Enterprise Planning, based in South Kensington.

Chema paid £475,000 for a three-bed Victorian terraced house in Wimbledon, southwest London, in August, and put it back on the market a month later for £530,000, without even giving it a fresh coat of paint.

There were several offers at the asking price, sparking a bidding war. The house finally went to sealed bids and Chema accepted an offer for £548,000 — a £73,000 profit on a house he has never even slept in.

“The plan was to move in,” says Chema, “but I realised I could make money by selling, even with stamp duty and agency fees. I do a lot of risk analysis. I looked for a property that had the potential to go up in value.”

London’s property market has been gathering momentum since 2005, when bankers, brokers and other key staff in the City received bumper Christmas bonuses. Last year, about 3,000 people pocketed at least £1m; this year, bonus payments will be about 15% higher, according to the Centre for Economics and Business Research. The total payout is likely to be almost £9 billion, much of which will flood into the capital’s housing market.

“Agents are getting higher and higher prices due to a lack of stock,” says Richard Donnell, director of research at price monitor Hometrack. “London is the only region where supply of property for sale has fallen in the past three months.”

Three weeks ago, the Kensington office of Savills had only four houses on its books listed above £1.5m. That figure has now doubled, but so has the demand.

“Last week, we agreed the sale of an unmodernised house in Holland Park,” says Kit Allen, a partner at the office.

“It sold within three days for 25% more than the guide price. The owner had tried to sell it unsuccessfully in 2004, then again in 2005, at the same guide price of £3m.”

To secure the house, the successful buyer offered a substantial non-refundable deposit to avoid being left at the mercy of sealed bids, and exchanged within five days.

The scenario is repeating itself across the capital, with agents reporting as many as 30-50 buyers for each £1m-plus property. “The market is the tightest it has ever been,” says Lulu Egerton, director of Lane Fox’s Chelsea office. She adds that about 60%-70% of their sales now go to sealed bids, or to a knockout bid intended to take the property off the market.

“The lack of supply is down to several factors,” says Egerton. “First, people don’t move as frequently as they used to. Second, clients are continuing to buy, but are not selling up and are keeping more properties for investment.”

A Chelsea property that came on to the market at £2.5m last Friday attracted bids of £2.6m and £2.65m straightaway, Egerton says, and went for £2.8m by the end of the weekend. A house in the same street at the beginning of the year went for £500,000 less.

Arabella Pappini, a London buying agent for The County Homesearch company, has been part of the stampede trying to secure good properties for her increasingly frustrated clients. “Gazumping has been showing its ugly head,” she says. “Buyers have to be prepared to make a decision on the spot — you can’t take days to think about it.”

“Less-good” or overpriced properties will still struggle to sell, she says. Donnell agrees: “I don’t see this being sustained until next year,” he says. “It is a mini-cycle.”

Beauchamp Estates, 020 7499 7722, www.beauchamp.co.uk

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