Average prices for prime property in central London declined 1.2% in the year to March, according to a Knight Frank report released Wednesday.
But as prices languished, the number of transactions in the same time frame rose 6%, the London-based property consultants said, pointing to the market adapting to the higher rates of stamp duty that went into effect in 2016.
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Sales of prime central London properties priced between £5 million and £10 million (US$6.77 million to US$13.55 million), logged the most transactions in the year to March, up more than 10%.
"The relatively better performance is a function of the fact that this is the segment of the market where stamp duty adjustments were made earlier," Tom Bill, Knight Frank’s head of London residential research, told Mansion Global.
"What you've seen is a sort of earlier adaptation to higher transaction costs," Mr. Bill said. Now, "it’s coming out the other side."
Property prices in the same price segment saw the biggest growth in the year to March, rising 1.2%, according to the report. In fact, it was the only price segment to record any price rises compared to the year previously.
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Prices for homes over £10 million fell 0.2%. While properties priced between £1 million to £2 million (US$1.35 million and US$2.7 million) and £2 million to £5 million (US$6.7 million) dropped 1.6% and 2% respectively.
"We see in the short to medium term a fairly modest recovery in the prime London property market," Mr. Bill said, expecting it to continue that way for a few years.
Prime central London’s average rents fell 0.8% in the year to March, the report said.
Easing supply and robust demand has values edging towards positive territory. The last time positive annual rental value growth was recorded was in January 2016, the report said.