London’s housing market continued to pick up steam last week, with sales soaring to double the five-year average, new research showed.

The British capital and much of the U.K. have seen a surge in demand, with the number of offers buyers made on homes hitting record highs in recent months, according to real estate firm Knight Frank, which published the research on Friday.

The boom in activity reflects buyers taking advantage of short-term tax breaks that have eliminated stamp duty on the price of a home up to £500,000 (US$660,800) until April.

That window of savings also coincides with a mass shift in people’s housing needs, as people must accommodate working and, potentially, schooling their kids remotely, reflecting similar market forces driving activity in other parts of the world, notably the U.S.

Nationwide, sales in the week ending Aug. 29 were the highest since the end of 2019—when the outcome of the December general election unleashed a surge of pent-up housing demand.

U.K. sales were 69% above the five-year average in the week ending Aug. 29—the 15th busiest week on record, according to Knight Frank, which has been keeping track for 20 years.

Meanwhile, sales outside of the capital were 60% above the five-year average, and marked the biggest total in nearly two years.

A spike in demand amid a housing shortage has created a highly competitive environment in some cases. Bidding wars are driving up prices and causing buyers to pay above asking price, said Edward Rook, head of Knight Frank’s country department.

And for now, there’s little to suggest “the high levels of demand we’ve been experiencing since the market reopened abating,” Mr. Rook said. Mortgage approvals, a leading indicator of future home sales, jumped 66% in July compared to June, the Bank of England said this week.

Demand for three-bedroom homes is particularly hot, especially in London, where residents are seeking slightly more space as they work from home, Knight Frank had found in previous research.

London was slower to see a post-Covid rebound in activity, but the latest sales data showed the capital’s recovery has now surpassed the rest of the country. The number of offers London sellers accepted in August was the highest on record.

There are also signs that home prices in the capital, which have experienced years of deflation in the wake of tax changes and Brexit, could show more strength as a result of the boost in activity.

Most London sellers have been able to strike deals within 10% of their asking price if not closer, said James Clarke, head of London sales at Knight Frank.

“Pent-up demand is now delivering hard and fast results,” he said.