The luxury residential market in Central London continued to stabilize in May, with homes valued between £5 million to £10 million leading the pack, according to a report Friday.

The average price of homes sold for £5 million to £10 million (US$6.67 million to US$13.33 million) increased 1.1% year-over-year, following a 1.2% climb in the prior month, according to Knight Frank’s Prime London Sale Index.

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Although it marks the only segment with a positive price growth, the overall luxury market in Central London is showing signs of stabilization due in part to more realistic pricing, said Tom Bill, head of London residential research at Knight Frank.

“As the asking prices fully reflect the higher rate of stamp duty, buyers are returning to the market, although still with much scrutinization,” Mr. Bill said.

At the end of May, the number of new buyers registering with estate agents had risen 13% compared to January 2016, before the government began levying an extra 3% stamp duty on second-home buyers that April.

As far as other price points, while the average sales prices continued to trend downward on an annual basis, the rate of decline in May seemed to be bottoming out.   

PRIME CENTRAL LONDON SALES MARKET IN MAY
TIME PERIOD up to £1m £1m to £2m £2m to £5m £5m to £10m over £10m
1 month -0.5% -0.2% -0.2% -0.1% 0.0%
3 months -0.6% -0.9% -0.7% -0.3% -0.2%
6 months -1.3% -1.2% -1.4% -0.6% -0.8%
1 year -2.2% -1.6% -2.1% 1.1% -0.3%
Year-to-date -1.2% -1.0% -1.2% -0.6% -0.8%
Source: Knight Frank

For example, the average price of super luxury homes, those sold for £10 million and above, dipped 0.3% year-over-year in May, but was basically unchanged from April.

Overall, the Prime London Sale Index—which checks the health of the luxury market through a combination of sales volume, average price, new listings and other metrics— fell 1.4% year-over-year to 5,879.4. Compared to April, the reading was 0.2% lower.

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