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    LONDON — A three-bedroom, 2,300-square-foot apartment recently went on the market in London’s fashionable Eaton Square and an Italian buyer immediately snapped it up for £5.65 million — a surprisingly quick sale in what has been a flat market.

    But real estate agents say the lightning-fast $9 million purchase is representative of what has been happening in the top-end property market in London, which has long laid claim to the most expensive residences in the world: The euro’s strength against the pound is bolstering interest among buyers from Europe, perhaps the only bright spot in an otherwise unspectacular British housing market.

    “Unless there is a drastic shift in currency values, foreign buyers will continue buying prime London property,” said Charles McDowell, a London property consultant who specializes in properties priced at £5 million or more.

    Even so, the London market remains as perilous as ever, with many agents saying that they do not expect a full recovery until 2011– and that the 5 percent to 6 percent rise in prices in 2009 was the result of a lack of stock rather than proof the market was getting better.

    The inventory of property for sale is 20 percent smaller than it was a year ago, while a weak pound has spurred a 45 percent jump in prospective buyers from overseas, according to Knight Frank in London.

    “In terms of future growth, we see 2011 as being the year of big growth for London and Southern England — and 2012 for the rest of the U.K.,” said Liam Bailey, head of residential research at the Knight Frank agency.

    In addition to unemployment, Mr. Bailey said that the twin issues of inflation and future finance costs — coupled with a nasty combination of spiraling government debt and the resulting tax rises and spending cuts — are the greatest causes for concern.

    But from 2012, a broader economic revival, fueled by growing employment and the hype surrounding the London Olympics that are to be held that summer, should help to underpin a real recovery in household income and house prices. But, Mr. Bailey added, the residential market is expected to continue to be uncertain in many parts of the country and negative equity would continue to provide a drag on activity levels through 2011.

    For 2010, Mr. Bailey predicted that prices overall would not fall more than around 3 percent.

    Camilla Dell, manager/partner at Black Brick Property Solutions in London, said that property price fluctuations in the next few years would depend on unemployment, interest rates and mortgage availability.

    “Once interest rates start to go back up, it is likely we may see a large number of properties come onto the market in London, and this could put a stop to the recent price rises we have seen over the last few months,” she said.

    For years London was home to an overheated property market, a city where high-end properties could command as much as $5,860 a square foot.

    But the global recession battered the property market early in 2009 and it has only rebounded somewhat in recent months — prices in some parts of London are up by as much as 6 percent — mostly because of the weak pound and interest among foreign buyers.

    “Up to 80 percent of the purchasers we have been dealing with throughout 2009 do not come from the usual home marketplace — people upgrading or downgrading their main residence,” said Gary Hersham, director at Beauchamp Estates in London. “Most of the British purchasers tend to be investing rather than moving home, and probably more than 50 percent of our purchasers are foreign, particularly those from the euro zone wishing to cash in on the extremely favorable exchange rates.”

    James Bailey, head of sales at Henry & James estate agents in London, said that European buyers are enjoying a 35 percent discount on 2007 prices. “We are seeing Europeans buying in the £1 million to £2 million range, mainly as a pied-à-terre for themselves or as a rental investment,” Mr. Bailey said. “With interest rates so low, investors are opting to put money into bricks and mortar rather than into savings and London has always represented a sound investment.”

    Martin Bikhit, managing director at the real estate agency Kay & Co. in London, said that he, too, has witnessed a spike in interest from overseas investors who want to take advantage of the weak pound and lower capital values.

    “In some cases savings of up to 50 percent were made when compared to what an identical property would have coast 12 months ago,” he said.

    But Louise Hewlett, managing director at Aylesford International real estate in London, said the higher house prices in recent months have given the false impression that the market is healthy.

    “Mortgages have remained at their lowest level for over two decades, which has resulted in fewer properties coming to the market, and it is the shortage of supply that has given the rather false impression of a buoyant market,” she said.

    Mr. McDowell, the London property consultant, said that tax increases for Britons and expatriate residents could prompt more wealthy property owners to decamp to Switzerland or elsewhere, putting more properties on the market for sale.

    But, he added, fleeing Britain seems a rather drastic move with an election on the horizon.

    Still clawing out of a recession, the government has increased its top income tax rate to 50 percent, a higher-than-anticipated levy on annual income earned in Britain of £150,000 or more.

    But if the Conservatives win the election, which Prime Minister Gordon Brown must call no later than June 2010, those tax increases may be short-lived.

    Amid a troubled real estate market, Mr. McDowell has spotted one trend: More buyers are financing — or refinancing — their major property purchases.

    “In the last six months,” he said, “two thirds of our transactions over £5 million have been financed, a far higher percentage than would have been purchased with mortgage financing in previous years. There used to be an image issue and it was thought that people who borrowed to buy didn’t have deep enough pockets.

    He continued: “Now clients are very keen to hang onto their money and borrow to buy. They want to stay liquid.”

    The New York Times 8.1.10