London's bloating housing market is not a bubble, says the boss of online estate agency group Zoopla.
"Talk of a bubble is premature because it implies that people are acting in a way that doesn't make sense and that prices are unsustainable," Alex Chesterton, Zoopla's chief executive, told The Telegraph.
Chesterton's claim comes hot on the heels of recently-released data from the Office for National Statistics (ONS) which shows that average price of a London property jumped by 18.7% in the year to April 2014, to £485,000. That compares to a 9.9% rise for the UK as a whole to an average price of £260,000 over the same period.
Soaring house prices in the capital are fuelled by a worsening housing shortage, intense demand and heavy foreign investment.
There are concerns that low interest rates thanks to the Bank of England and higher prices will cause a credit bubble as ordinary homebuyers stretch themselves financially to take on bigger mortgages.
When the Bank of England eventually hikes interest rates again, those who were at the limits of affordability may be pushed to default when their monthly mortgage repayments rise.
"You have to look at London in a slightly different light. It's a market that has finite supply and enormous demand that has driven prices to a level that makes London very expensive, but that doesn't necessarily mean it is not sustainable," said Chesterton.
"Bubble is a word that implies it is about to burst. I wouldn't say that's the case. If you compare London to other cities around the world, actually it's not the most expensive city in the world and maybe it should be. As a Londoner I certainly think it's the best city in the world."
Zoopla was floated on the London Stock Exchange in mid-June. Its share price soared in conditional trading, valuing the firm at around £960m.
A revival in the housing market and the advance of digital has boosted online estate agents such as Zoopla, which said it saw an average of 39.9 million visits to its website amid the recovery.