The number of people living in London is due to rise by 800,000 in the next ten years - and there are not enough properties for sale. Pressure on land, queues for planning and restrictions on green-belt development mean this is already a severe housing shortage - one can describe this as a housing crisis.

Only seven percent of properties in London are 1 bed flats - there are massive numbers of single people who want to live on their own or with a partner in their own home. Most flats being built are 2 bed flats. Not enough cheap houses are being built. Properties for sale are required by families, wealthy individuals and couples.

Over the last 10 years - many things have worked in London's favour as regards property for sale:

• The harsh Sabine Oxley regulation put on US companies has driven many investors and companies to choose London as a place to make their base - and trading in London has grown because the regulatory environment is less difficult.

• Many Middle East investors no longer want to use the US after tensions in the last few years - so more money has been entering London.

• London is English speaking and has become a base for a lot of rich individuals who operate their companies and investments from London - they feel that they can trust the environment and they like the quality of financial services. Also there is very little corruption and poor practice is rare.

• The vast mixture of races in London make international people feel 'at home'.

• Many foreign billionaires find their tax very favourable within the UK.

• The law, civil rights and fairness of the society attracts these high net worth individuals. Many foreign billionaires find it an easy way to protect their wealth.

• West London will always be a very popular area for expatriates of all nationalities.

• The West End theatres and quality of entertainment is high - it is a fun and prestigious place in which to live.

• It's easy to visit London and to take up residence if you are a wealthy expatriate - the air links and communications with major cities all over the world and countries are exceptional.

• Safe and secure political status - relatively stable tax and financial regime. • Huge influx of money from city bonuses and global mergers and acquisitions activity.

Because of these reasons, there has been a lot of money coming into London. Most of the money being put into cheap property comes from overseas - and considered by many a safe haven.

The growth in population, employment, banking and financial services is massive and has lead to strong GDP growth. It's difficult to find statistics - but we believe London's GDP is growing at about 4 percent per annum, whilst the north of England is growing at 1.5 to 2 percent per annum.

If you look at wage inflation running at 4 percent with big city bonuses and very little housing being built - it does not take an expert to work out that prices of property for sale will rise.

Think about this - as interest rates have risen from 4.5 percent to 5.0 percent property prices have accelerated. If the UK GDP comes down and inflation falls to 2 percent, if interest rates then drop to say 4.0 percent - just imagine the impact this would have on the property for sale market in London.

Affordability would definitely improve, and prices would rise again. And remember, if the UK GDP is 1.5 percent, its likely London's GDP will be double this at 3 percent.

In the UK there is a dual economy - the north and south. The Bank of England considers both in a weighted sense and would not want the north to drop into recession. So as the north slows, interest rates will drop slightly leading to further price rises in London.

To conclude, because of the emergence of London as the global centre for finance and business, not enough cheap houses are being built, there is an increasing population, high GDP, high employment at present and infra-structure developments (e.g. 2012 Olympics) we see demand for 1 bed flats in central and peripheral areas remaining strong for many years and prices will continue to climb - by 7 percent in 2007.