Cluttons says that many would-be sellers have put off marketing their properties as they are worried about receiving a lower than expected valuation.
But the estate agency says that there has actually been some recovery in activity in recent week, with frustrated savers and parent buying for their children returning to the market.
This has led to fierce competition for quality properties, especially given the shortage of stock.
James Hyman, partner for residential sales at Cluttons, says: “The market has improved considerably throughout April with demand in Central London exceeding current stock levels.
“We are now seeing prices only 15% below the August 2007 peak, as opposed to 28-35% off the peak as at the second half of last year.”
He adds: “Buyers are keen to take advantage of low long-term fixed rates currently available, before the market begins to slow again in the second half of the year when interest rates and unemployment are expected to rise.
“Home owners will also start to feel the pinch on their budgets as they relinquish low tracker rates and higher earners start to build in the greater tax burden announced in the Budget, which will affect their ability to borrow.”