After a year of huge price increases for London homes, you would think the market had gone crazy.

You haven’t seen anything yet.

London is just following the rest of Britain’s real estate. Don’t be surprised if the capital’s fevered property market doubles in value before this boom runs out of steam.

“London and the South East have a lot of catching up to do over the next few years,” senior economist at the Royal Institution of Chartered Surveyors in London, David Stubbs, said in a telephone interview. “They have underperformed the rest of the country.”

It can’t have escaped many people’s attention that for the last year, the prices of London properties have been rattling ahead like a freight train.

London-based real-estate broker Knight Frank LLC said in January that prime-property prices in the capital were rising at the fastest rate in 27 years. Their values jumped 2.6% in December, bringing the increase for the year to 28.6%. You need a long memory to be familiar with property inflation on that scale — it was the biggest annual increase recorded by the survey since 1979, when home values surged almost 44%.

Indeed, London is the world’s most expensive city for prime property, according to a report by CB Richard Ellis Group Inc. last year. Prices in areas such as Chelsea and Hampstead averaged $2,244 per square foot in the second quarter of 2006. The same space for Manhattan homes — on Fifth Avenue, Park Avenue, and Madison Avenue near Central Park — cost about $1,870.

It doesn’t make much difference whether you are at the top or the bottom of the property ladder. Britain’s largest mortgage lender, HBOS Plc, said this month that the average price of a London home rose 12% last year to 287,176 pounds or $563,000.

Indeed, even the broom closets are pricey — quite literally. This month, a former cleaner’s cupboard measuring just 11 feet 3 inches by 7 feet 3 inches in West London’s Chelsea district was valued at 170,000 pounds, according to a report in the Guardian newspaper. You will need to spend an additional 30,000 pounds on renovation as well.

So that is a bubble, right? Surely prices can’t keep escalating at that kind of rate. The world will run out of money.

Well, think again. The latest round of London property inflation has probably only just begun.

The London property market has become like the stock market (which isn’t that surprising, since many of the people buying the properties make their money from the trading of equities). It doesn’t move in straight lines. Like a share price, it does nothing for a long time, then suddenly shoots up.

London real estate has lagged behind most of Britain for the best part of this decade. And right now it is being revalued.

According to HBOS’s property calculator, a home in London that was worth 100,000 pounds at the start of 2000 would have cost 196,246 pounds at the end of last month. That may sound pretty good. But you would have done better elsewhere. The same 100,000 pounds invested in a property in Wales would have been valued at 257,173 pounds. Or in Northern Ireland, the figure was 304,064 pounds.

Measured against those sorts of gains, the escalation in London house prices looks relatively calm.

Yet, it isn’t places such as Wales or Northern Ireland that generate the wealth in Britain’s economy. It is London. The capital’s failure to keep pace with property-price increases in the rest of the country doesn’t mean that London has been getting poorer. Far from it. Powered by the strength of its financial-services industry, it has been getting richer.

London will catch up. Its wealth is still growing. The British recruitment consulting firm Morgan McKinley says the number of banking jobs will probably rise to a record in 2007. Meanwhile, more people are pouring into London. The mayor of London, Ken Livingstone, said in a 2002 report that the population of the city would add 700,000 people by 2016, taking the total to 8.1 million.

That will keep property prices moving ahead. All those people surely need to live somewhere.

A broom closet valued at 170,000 pounds may seem like crazy money — and it probably is. There is still no reason that it shouldn’t cost you 300,000 pounds in three years’ time.

Mr. Lynn is a columnist for Bloomberg News.