The marginal increase in growth is due to the 2.2% growth in prices of property over £2m, an increase of 1.7% since last year, according to research by international property adviser Savills.
However, prices have fallen in all of the London sub-markets above this price level. The largest decrease can be seen in the £10m+ market, where prices have fallen by -7.5%.
Across the board, prime central London property prices have fallen by -6% since last year.
Lucian Cook, head of UK residential research, Savills (pictured), said: “This reflects a continued adjustment to a less hospitable tax regime and successive increases in Stamp Duty rates in particular. This is particularly impacting the higher value markets of prime central London.
“Since the credit crunch, it has been common practice to index price growth in prime London to the previous peak of 2007/8. It is now clear that 2014 is the new ‘peak’ reference point for a market that has continued to adjust to higher taxation, introduced at a time when the market was already looking fully priced,” he said.
Cook added that transaction levels for the first 11 months of the year were 75% of the levels seen in 2014 for stock sold over £1m.
“In addition, there is emerging evidence of greater activity in December among investors and second home owners keen to avoid the 3% Stamp Duty surcharge that applies from 1 April next year. This suggests that where stock is priced appropriately there is still a market, particularly for best in class.”
Savills expects prime London values to remain broadly flat through 2016 and most of 2017, before gradually returning to trend growth, with a five year forecast of 20% growth across all of the prime capital markets.
Beyond London, prime housing markets have seen an annual price growth of 2.4%.
The largest increase (4.4%) can be seen in urban locations such as Beaconsfield, Cambridge, Bristol’s Clifton, York and Chester.
Rural locations have seen a much more modest annual increase of 0.7%.
Prime regional house prices are forecast to rise 2% next year and 21% in the next five years. London’s extended commuter belt is expected to outperform all other regions, with a predicted rise of 24% by 2020.