The latest reports on the London housing market are of massively increasing demand fuelled by bonus fever. Not by people spending their bonuses, but of people buying houses in advance of the bonuses they will receive.

The Times ran an article on Monday past on how Prime London properties (£1m plus) in "bankers enclaves" are selling for prices in excess of prices seen at the peak of the boom in 2007, as banker's enter sealed bidding wars with each other and wealthy foreigners for the best properties. The reports are coming from Knight Frank, the global estate agency with a vested interest in London's prime market.

Have we learnt nothing? If we have seen the last of price drops in the UK it is only just and by extreme luck, because houses are still grossly overvalued according to impartial analysis, and still mostly unaffordable to the largest demand base of first time buyers. But we are all quick to jump and shout about how brilliant it is that these houses are selling for £5m+.

There is very little to justify these houses to hold such a value, having been worth less than a million only a few years ago. Their price is being determined by the wealth of London bankers rather than the value of the property and such cycles are only ever going to lead us into more crashes.

The bank's quick return to such huge bonuses has sparked anger in the press and the government. There is even talk of a windfall tax on the big banks.

Something like a windfall tax is the only way to stop the banks from giving out such huge payments, because the banks have to be competitive about what they pay the best investors, or face losing them.

The government stopped RBS from giving bonuses last year, and they lost staff. Trouble is they started offering multi-million Pound payments to lure the best bankers to come and work for them instead. If a windfall tax is levied on all banks then it would even the playing field and stop bonuses equally across all banks.

However, the financial services sector accounts for about 15% of UK GDP, and the government will not want to damage it too much either. We will find out in the pre-budget speech, due in the next few weeks.

I just wish that something could be done to regulate house prices at the same time. But should the prices of lavish properties in such areas really be regulated? How do you regulate a sought after property? If multiple wealthy buyers want the same property it is always going to mean a bidding war. We can't ask the seller to toss a coin. No, it does look like regulating the banking industry is where my anger will have to be channelled after all.

Across the rest of the market, demand is currently increasing. Today the British bankers Association revealed another rise in mortgage lending in September. Again it was massively higher than September last year, but lower than the peak in 2007. None the less, people are getting good prices for their homes at the moment. If you want to sell your house you can do so with Zungalow for just £29 per year.

When the financial crisis crossed the Atlantic and Britain began to feel the effects, which were quickly felt in the housing market, nowhere felt it quicker than London. With that in mind, there is weight to the claims that the London market will also be the first to show signs of recovery.

If you take some reports at face value then that recovery is not so very far away, in London at least.

In a press release issued today, but containing quotations collated last week, Kinleigh, Folkard and Hayward staff are extremely optimistic about the London housing market.

"In Muswell Hill, things tend to dip over Easter as families drift away for the school holidays, but I think that after the break, we will again see people making a definite bid to move over the summer, in preparation for the new school year," said Andrew Hunt sales manager at KLF's Muswell Hill Branch.

Hunt also said that several Muswell Hill properties had received above asking price offers in the past month, and that there had been an increase in the number of properties receiving multiple bids.

KLF's Streatham Branch are also receiving multiple offers on properties, and their sales manager James Brooks has said that prices are no longer falling in the borough.

"Following on from a good February, we are seeing multiple offers being made on properties and a high level of buyers registering with us. Prices are remaining competitive, but are certainly not falling in Streatham," he said, adding:

"Easter normally marks the start of the busiest period in the housing market and we are expecting good activity. Mortgage rates are coming down and this is attracting buyers who are looking to make offers."

Fellow KLF sales manager Mai Pexton told a similarly positive story of optimism for the Marylebone borough and the buoyancy of the Central London market.

"The current climate offers some vendors the opportunity to go to sealed bids and we have seen properties with three or more potential buyers bidding, which provides a very exciting situation for our clients," she said.

The Forest Hill Branch also noted over asking price offers, and "far greater activity in the market." And the Earlsfield Branch sales manager was also positive about greater buyer confidence in the market, and offers getting closer to asking price.

In fact the one exception to the completely positive tone of the release was from the Kennington branch.

"Looking forward, I think the new HIP regulation will affect instruction levels in April. Speculative vendors are being put off by the potential delays in marketing, but I expect this to be short term and in my experience the motivated sellers are still very much committed to moving," said Kennington sales manager Justin Bhoday.

It will be interesting to see whether the KLF's optimism for the month of April was realised, and whether transaction levels begin to return to somewhere close to normal levels.