More "realistic" pricing of the most expensive homes in London, as well as currency fluctuations, have brought cautious buyers back to the market.
Sales of prime London property have "picked up significantly", according to Savills. Average prices of top London property fell by 2.2pc in the last three months of 2016, as sellers catered to lower expectations. The value of homes in London worth more than £2m has fallen an average of 4.9pc year on year.
Lucian Cook, head of residential research at Savills, said that sellers were increasingly aware of the need to factor in the effects of increased stamp duty and economic uncertainty into asking prices in order to attract cautious buyers.
He added: “We saw a real dearth of transactions over the late spring and summer months following the race to beat the new 3pc surcharge [of stamp duty for second homes and buy-to-let investments, which started in April].
"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.”
The volume of transactions was still far below the previous year, as the higher end of the market has been hit by an earlier stamp duty hike for homes worth more than £1m, implemented in December 2014. From January to the end of November 2016, Savills found that there were about 320 sales worth over £5m in London, equal to £3.7bn, 17pc lower than during the same period in 2015.
At the very top end of the market, with homes worth more than £20m, there has been more activity than in 2015. In the 11 months to the end of November the total amount spent on these properties increased by 25pc to £1.43bn.
Savills has forecast there will be no price growth in prime London properties during the next two years, with a recovery in 2019.
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