Blame Venetia (or, depending which side of the deal you're on, thank her.) Seven years ago, a farsighted former City worker called Venetia Strangways-Booth decided a rundown street in Clapton, east London, needed a proper cafe, one that served decent pastries and excellent espresso.
Back then, Chatsworth Road had a bookie or two, a couple of newsagents, a massage parlour, a grocers and a fried-chicken joint. It took Venetia six months to find a landlord who thought her idea stood the slightest chance of working, and almost as long to find a bank willing to lend her the money.
These days, the road boasts a whole bunch of coffee-shops in the stripped wood and upcycled furniture vein, a thriving juice bar, a creperie, a chic deli with a French name, a just-like-mama-makes-'em pizzeria, a bicycle repair shop and a Sunday farmers' market.
Oh, and some very attractive side roads in which, according to a Nationwide survey last week, house prices have soared by a record 16% in the past year alone, and doubled over the past decade. So much for the crash: along with Lambeth, Hackney is in the vanguard of London's latest housing boom.
This isn't, obviously, all – or even partly – down to Venetia, who whether by luck or good judgment simply found herself in the right place at the right time: a symptom, not a cause, of what was always going to happen in Hackney once it had finished happening, a few years earlier, in Islington.
But the borough's rocketing property prices seem to have taken even the professionals by surprise. "And they're showing no signs of stopping," says Mahe Georgio, manager of local estate agent Castles, established for 30-odd years on nearby Lower Clapton Road (itself long known, at least in the media, as "Murder Mile").
"I grew up in Hackney and I can tell you it wasn't the place to be then. Not at all. But it really is now."
People, Georgio says, "are buying anything that's for sale. A couple of years ago, buyers would turn their noses up at ex-local authority stock – they wanted period Victorian, or trendy warehouse conversions. Now ex-local sells in days, and for more than the asking price. It's positively sought-after."
Demand has become so frenzied that, with 400 to 500 clients actively looking for homes in the area and hundreds more having registered an interest, the agency has turned to open days, sealed bids and "best and final" offers. "It's fairer and it avoids bidding wars," says Georgio. "But even as things are, there's no room now for offers below the asking price. And you've got no chance of buying in Hackney unless your finances are already fully sorted, your property is sold and you're ready to go."
Prices are rising so fast, adds sales negotiator George Athanasi, showing me a smart, newly converted three-bed ground- and lower-ground floor garden flat that Castles has just sold for (wait for it) £535,000, that "even the surveyors are getting confused. We get calls: they want to know the recent comparables, whether these prices are real."
Buyers are now looking, says Georgio, at "£200,000 for a one-bed, ex-council flat, and £300,000 for a one-bed period conversion. Upwards of £700,000 for a three-bed Victorian terraced; that would have been £600,000 a year ago, and £300,000 before Venetia's. And this is Hackney. It's quite shocking, even for us."
Hackney estate agents are not the only ones in shock. According to that Nationwide survey, the average UK home is currently increasing in value by more than £50 a day; the annual rate of growth is now running at 5% nationally, and 10% in London. The upturn is, it seems, affecting all of the UK's 13 regions, although prices in the south of England are rising faster than elsewhere.
In London as a whole, surprising as it may seem, typical property values have now reached 8% above their 2007 peak. Astonishingly, even "mid-ranking bankers" – earning less than £500,000 – are now complaining that central London house prices are prohibitive.
That's not big news, though, to Rupert des Forges, head of elite agency Knight Frank's Knightsbridge office. He can pinpoint precisely when things started picking up again in the prime parts of central London that he specialises in – and it was more than four years ago.
"Easter weekend, 2009," des Forges says. "That was the moment. We'd had a fairly torrid seven or eight months after September 2008, when the City went into freefall, but we came back that Easter and the market was flying, and it's been flying ever since. Not 30%-a-year growth like 2006 and 2007. But good, firm, month-on-month growth. "
The mood of the market has changed, des Forges notes, which is probably a good thing: "Back then, we had houses selling for a million pounds more than they had 12 months earlier. The froth's gone out of it. Volumes are really down; you need much more equity than you did. But people have it. People have the money."
Prime central London is, plainly, not Hackney: des Forges is showing me a sumptuous residence he modestly describes as a "best-in-class garden square apartment" on a classic Knightsbridge square. "It's a 3,000 sq ft lateral conversion across two 1860s townhouses," he says, as we take off our shoes in the hallway. "Six windows overlooking the square. Building just refurbished to the highest standards; apartment immaculate. You're 400 yards from Harrods, and the same distance from Hyde Park." The price is £11.5m.
Who has that kind of money? Plenty of people, apparently: this kind of property typically sells in days. And not all foreigners: des Forges reckons a good 50% of his clients are British, a mix of old London money and more recent fortunes. For the rest, Greeks are sharply up (their numbers have tripled since the eurozone crisis began), but Knight Frank has sold central London properties to buyers from 70 different countries over the past 12 months – about double the pre-crash number.
That's part of the explanation why, when it comes to property, prime central London is so different from the rest of country: supply, particularly in the most sought-after areas including Knightsbridge, Belgravia, Mayfair and St James's is, as des Forges puts it, "pretty much a finite resource", yet more and more people want to live there.
If anything, says Knight Frank's head of residential research, Liam Bailey, the crash has actually strengthened the capital's position as a property exception: after plummeting by as much as 25%, he reckons central London prices have soared by some 60% since March 2009, and are now a good 20% higher than they were before the crash. What the crash has effectively done, in other words, is widen the gap between London and the rest of the country even further.
"The big question in 2009," Bailey says, "was whether London's role as a major global centre had been undermined. The answer is now pretty much established, and it's no. London was always a big business and financial centre, a place where wealthy people want to live and buy property. But the arguments for relocating here are now stronger than ever. It's just in the right place, it has the right assets, it ticks the right boxes. The market here now is incredibly diverse, both in nationalities and business sectors – it's no longer just financial services driving it. But key to it all is London's connectivity as a global business centre. And as more and more people join the global economy, it doesn't take many of them to want to come here ... "
Most analysts see central London's already sky-high prices moving inexorably higher. "If London is going to continue to grow as a global city and supply is not increased, then prices will go up," Bailey says. "More demand will mean higher prices." So since the estate agents' traditional adage is that whatever direction prices head in prime central London, they will eventually follow – with varying degrees of lag – in outer London too, then in the home counties, and finally in the rest of the country, are we heading for yet another bubble?
A lot of people seem to think so. The Nationwide figures are, certainly, the latest in a steady stream of news and data showing that the housing market – our abiding national obsession – is on the move again. In August, the Royal Institution of Chartered Surveyors (Rics) said prices were rising at their fastest rate since the market peak of November 2006.
This month, we learned that more than 560,000 people are now working in estate agencies, the highest number since records began in 1978 (the sector is apparently the fastest-growing part of the national workforce). This week, the Bank of England declared that the number of mortgages approved for homebuyers was at its highest since early 2008; the 62,200-odd house purchase loans given the go ahead in August represented a 30% increase over the same month last year (although still well below the 2007 peak).
As the prime minister announces plans to bring forward the start date for the government's controversial £12bn Help to Buy scheme, designed to increase the availability of 95% mortgages, lenders are gearing up for a new goldrush: both NatWest and Royal Bank of Scotland have said they will open their branches late to cope with the anticipated extra demand.
And according to a report this week by the Centre for Economics and Business Research, the average price of a home in Britain will jump by a quarter in the next five years, hitting a record figure of nearly £280,000, with average London prices set to surge from from £395,000 today to £566,000 in 2018.
Bailey is cautious. He is forecasting "quite slow growth" in the longer term outside central London, where he says prices have only really been rising since the budget in March. For most people, he notes, "how much I can pay for a house is a factor of how much I earn, how much can I borrow, what's my deposit. Prices rose before the crash because of access to credit and the availability of debt. They've struggled since, because credit has not been so available."
But many fear that with mortgage approvals already rising and interest rates set to stay low for some time, Help to Buy – which enables people to buy a home for up to £600,000 on a deposit of only 5%, with the government providing a guarantee to the lender of up to 15% of the loan – could be the spark that ignites another full-blown British housing bubble.
David Cameron insists the scheme is necessary to help young people who can afford "sensible" mortgages but not 25% deposits get onto the property ladder. But it has been criticised as "reckless", "mad" and even "dangerous" by economists and bodies as varied as the International Monetary Fund, the Institute of Directors, the Adam Smith Institute, the Office for Budget Responsibility and the Treasury select committee. In an apparent attempt to appease the scheme's critics, the chancellor, George Osborne, recently gave the Bank of England a bigger role in ensuring it doesn't drive up prices.
Here's the problem, though: after more or less continual annual increases for the past half century or so – they trebled between 1995 and 2007, and have increased 50-fold since 1970, with the estate agents Savills this year putting the combined value of Britain's housing stock at a staggering £5tn – house prices in Britain are already far, far too high.
According to organisations as reputable as the IMF, the Economist and, most recently, the OECD, even post-crash UK house prices are still more than 30% too high compared with rents, and more than 20% overvalued compared with incomes.
There are many reasons for this, a big one being chronic underbuilding. In the 1970s, Britain regularly built 300,000 new homes a year – over that decade, housebuilding outpaced population growth sixfold, the Economist notes. In the past decade, however, "only half as many homes have been built as people added". Right now, we should be building a quarter of a million new homes every year; in 2011 we managed 145,000.
That's not all, though. Low interest rates; reckless lending and borrowing that allowed self-certified, 110% and interest-free mortgages; the emergence of what Faisal Islam, in his book The Default Line, terms an infernal "bubble machine" in which everyone – from estate agents to lenders to solicitors to home-owners – had an interest in prices continuing to rise, have all contributed.
However it happened, home ownership in the UK has steadily become confused with wealth acquisition; the roof over our heads is now seen as a kind of "multifaceted financial instrument", Islam argues: an investment, a cash-machine, a livelihood for buy-to-let landlords, a supplementary pension (one report suggests the number of over-50s planning to use the equity in the homes to help fund their retirement has doubled to 52% in a year).
One of the many effects of this overvaluation, as most 20-somethings and many 30-somethings know, has been to put home ownership – certainly in southern England – a long way beyond their reach, unless they band together or rely on an increasingly substantial leg-up from their parents. Which, increasingly, they do: according to Georgio in Hackney, around half the first-time buyers on Castles books will be backed by the bank of mum and dad. Many of the remainder will be relatively high-earning sharers buying jointly.
Some will be helped by Help to Buy. But fundamentally, in great swaths of the country, house prices will remain out of all proportion to anything as mundane as salaries. This has happened in my working life: in 1985, fresh out of university, my then partner and I bought a newly converted one-bed flat in Acton for £32,000. We were each earning around £8,000 a year at the time, so needed to borrow twice our combined annual income to do so. Today, similar flats are changing hands at nearer £300,000 and two would-be buyers of the same age and in the same the jobs we were then would need more like seven times their joint salaries.
The crash, in effect, has had zero impact on London property prices, which in relation to earnings are as as high for first-time buyers as they were in 2007. In that context, surely, any kind of house-price inflation – even the risk of it – is undesirable. Even the agents see that. "We never had a US, Spanish or Irish-style crash," says Bailey. "House prices haven't really corrected significantly. Housing in the UK is still overpriced, compared to the fundamentals. What we want is even a little bit of price erosion, taking inflation into account."
But there are an awful lot of people who would rather that never happens.
This article originally appeared on guardian.co.uk