According to findings from Savills, average prices across all of prime London properties fell by 2.2% in the final quarter of 2016 compared to the three months previous, seeing prices drop 6.9% year-on-year and 12.5% from their peak in December 2014.
Meanwhile, prices in outer prime London, where the average price is just under £2m, appeared less affected by the removal of the Stamp Duty slab structure as prices slid by 6.9% from the final quarter of 2015 to a year later, and by 2.7% since their height in December 2014.
But Lucian Cook, Savills UK head of residential research, said the market was still attracting interested buyers.
“Committed sellers increasingly understand the need to factor in both the additional Stamp Duty and economic uncertainty to their price expectations in order to attract still very cautious buyers.
“We saw a real dearth of transactions over the late spring and summer months following the race to beat the new 3% surcharge. But further price adjustments, coupled with the currency play for international buyers, appear to have triggered greater buyer commitment and prime London sales volumes picked up significantly in September, October and November before easing back in December.”
Savills is forecasting no growth for the prime London market over the next two years, with the expectation that growth will total 21% in the five years ending 2021.
However, within the very top end of the prime London market, activity in the 11 months to the end of November was higher than the same period in 2015, according to Savills, with £1.43bn spent on property compared with £1.07bn a year earlier.
Cook added: “Recent market activity demonstrates the continued appeal of prime London property at the right price. But buyer sentiment remains fragile. Improved transaction levels are the result of adjusted pricing and should not be seen as a precursor to price rises in the foreseeable future. High Stamp Duty rates and the uncertainty created by negotiations to leave Europe will still need to be factored into expectations on value.”