The average property in Prime Central London is now worth more than £2 million, according to estate agent Marsh & Parsons’ latest London Prime Market Monitor.

The value of property in central hotspots including areas such as Chelsea and Kensington has risen by 9.3% in the past year and by 3.4% in the last quarter.

Marsh & Parsons said increased demand at a time of an acute shortage of stock is pushing prices higher. During the last quarter, 11% more buyers entered the market in competition for 14% fewer properties.

While transactions across Prime London as a whole increased by 40% during the last quarter, the volume of transactions in central areas reduced by 38%.

Peter Rollings, CEO of Marsh & Parsons, said: “It’s true that the imbalance of supply and demand is pushing property prices higher in Prime London areas. But it’s also creating an excellent time to sell property. Helped by the rapidly improving availability of mortgages, buyers are queuing up for the chance to buy a Prime London home.

“Property is changing hands in record time and for close to the asking price, with 98% of the asking price for Prime London property regularly being achieved.”

Despite the introduction of the 7% stamp duty tax, the number of properties worth £2m or more has continued to increase. 38% of Prime Central London properties are now worth £2m – and in Prime London as a whole, almost a quarter 24.6% of homes fall into this category.

The price increases are particularly pronounced in properties which were worth more than £3m in January 2010. At the beginning of 2010, the average price of a property in this category was £4,509,739. The average current price for properties in this category is now £5,481,884 – an increase of 20% in just 3.5 years.

In Prime London as a whole, property values have continued their upward momentum, with prices climbing by 12.7% in the past year and by 3.6% in the last quarter.

For the past five quarters running, growth in Prime London as a whole has outpaced Prime Central areas; experiencing consistently higher quarterly growth than its most central parts alone. But the gap is closing, with Prime Central London growth just 0.2% slower than that of Prime London overall in the last quarter, compared to a 1.6% difference in Q1 2013.