….predicted a nasty snapback. So far it hasn't happened. In fact, there are signs that prices are beginning to resume their upward climb. 

Sure, the 2006 London's real estate market saw a sharp slowdown. Buyers, no doubt influenced by all the crash-o-nomics, kept their powder dry. But that only caused demand to build up, and now the spark is back. First-quarter sales grew 41% from a year earlier, and prices are on track to grow 6% or more in 2007.

It's starting to feel like the feeding frenzies of three or four years ago. Instead of seeing houses languishing on the market, brokers -- or estate agents, as they are called in England -- say they can't find enough to sell. "There is an incredible shortage of property,"  "That has led to price rises of about 10% in the last three months throughout the entire market."

The action is hottest for houses priced at around 1 million pounds, or about $1.9 million, or higher. Each of those houses and well-appointed apartments attracts such a crowd that the agency is seeing multiple would-be buyers submitting sealed bids in envelopes.

Brokers and economists attribute the change in psychology to several factors. With private equity and M&A in high gear, the City, London's financial center, had a strong year in 2005. That led to big bonuses in early 2006 from banks and other financial institutions. Russians and other newly wealthy foreigners consider a London house an ideal place to stash some spare cash. And when you consider that Brits themselves like nothing better than to put money into property and that London will host the summer Olympics in 2012, you have the key planks in a possible floor under the city's prices.

Brokers say the current boomlet began last fall after the Bank of England cut rates. It is too soon to tell whether it will last, but posher neighborhoods are showing signs of gathering strength. In the verdant west London borough of Richmond upon Thames, for instance, the average selling price of a stand-alone house was 29% higher than a year ago in the first quarter, or $1.89 million, according to the Land Registry, the official recorder of property transactions.

In Camden, where Hampstead is located, the average selling price of a residence rose 18% -- to $943,000 -- from the fourth quarter of 2005 to the first of 2006. Sales volumes in greater London rose 41% year on year in the first quarter. With price increases in the less swanky neighborhoods more restrained, the Halifax says overall London prices have risen 7.2% over the last 12 months.

Of course, London house prices can and do fall. They did it for four years in a row in the early 1990s, and some homeowners didn't match the prices they paid in the 1980s property boom until near the end of the last century.

There's cause for caution today, too. Stansfield of Capital Economics, for instance, says it now costs 53% of an average Londoner's income to finance a home purchase. That's well above the 30-year average of 45%.

London is the most populous city in the European Union with a population of 7.5 million and a metropolitan area population of between 12 and 14 million. Its population is very cosmopolitan, drawing from a wide range of peoples, cultures and religions, speaking over 300 different languages. London is an international transport hub, with five international airports and a large port. It serves as the largest aviation hub in the world,  and its main airport, Heathrow, carries more international passengers than any other airport in the world.

London's vast urban area is often described using a set of district names (e.g. Bloomsbury, Mayfair, Whitechapel). These are either informal designations, or reflect the names of superseded parishes and city wards. Such names have remained in use through tradition, each referring to a neighborhood with its own distinctive character, but often with no modern official boundaries (the boundaries often overlap, allowing estate agents some leeway in defining the location of a property).

The West End is London's main entertainment and shopping district, with locations such as Oxford Street, Leicester Square, Covent Garden and Piccadilly Circus acting as tourist magnets. The West London area is known for fashionable and expensive residential areas such as Notting Hill, Kensington and Chelsea — where some properties can sell for £5,000,000 and above.

The eastern side of London contains the East End — the area closest to the original Port of London, known for its high immigrant population, as well as for being one of the poorest areas in London. The surrounding East London area saw much of London's early industrial development; now, brown field sites throughout the area are being redeveloped, including areas along the Thames (the Thames Gateway) and up the Lower Lea Valley, which is being developed into the Olympic Park for the 2012 Olympics. North London and South London are informal divisions of the capital made by the River Thames, although they can define varying areas.

The density of London varies, with high employment density in the central area, high residential densities in inner London and lower densities in the suburbs. In the dense areas, most of the concentration is achieved with medium-rise and high-rise buildings. London's skyscrapers such as the famous "Gherkin", Tower 42 and One Canada Square are usually found in the two financial districts, the City of London and Canary Wharf.

London's largest industry remains finance, and its financial exports make it a large contributor to the UK's balance of payments.[18] Over 300,000 people are employed in financial services in London, more than the entire population of Frankfurt in Germany, Europe's second biggest financial centre. London has over 480 overseas banks, more than any other city in the world. More funds are invested in the City of London than in the next top 10 European cities combined. The London Stock Exchange is the largest in the world, and bigger than New York and Tokyo combined. It has a combined daily turnover of US$683 billion, nearly a third of total world activity. The City is the largest financial and business centre in Europe, home to banks, brokers, insurers and legal and accounting firms. A second, smaller financial district is developing at Canary Wharf to the east of the City which includes the global headquarters of HSBC, Reuters, Barclays and many of the largest law firms in the world. London handled 31% of global currency transactions in 2005 — an average daily turnover of US$753 billion — with more US dollars traded in London than New York, and more Euros traded than in every other city in Europe combined.

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