Sales in the prime property markets in London increased year on year in the second quarter of 2019, boosted by a rise in transactions in the £10 million plus market which reached a four year high.

The latest real estate market analysis from Knight Frank also shows that on a quarterly and monthly basis the market has improved although compared with a year ago prices are still down.

In prime central London prices increased by 0.7% month on month, but fell 0.7% quarter on quarter and are still down 4.8% year on year. In the prime outer London market prices fell 0.1% month on month, increased 0.3% quarter on quarter but were down 3.7% year on year.

But the number of prospective buyers in London has risen strongly over the last year and their total spending power increased to £51.5 billion in the second quarter of 2019.

Prices have adjusted more quickly in the higher price brackets to the higher stamp duty, where trading volumes and the annual decline in volumes above £2 million is now more modest than above £1 million.

According to Tom Bill, head of London residential research at Knight Frank, the impact of new Prime Minister Boris Johnson’s proposed stamp duty cut on property prices is difficult to assess given the lack of detail and the potentially distortive effect on supply and demand.

But he pointed out that higher stamp duty and political uncertainty have curbed activity above £1 million over the last four years. However, activity was boosted by the postponing of the Brexit deadline from March to October.

Overall, demand has built after stamp duty related price adjustments, although some hesitancy remains due to political uncertainty. But there has been a boost for US dollar-denominated buyers in prime central London compared to before the vote to leave the European Union in June 2016.

The report also says that yields on prime central London property have widened in response to stronger rental values and declining prices. The difference between the prime central London gross yield and the benchmark 10 year UK government bond was about 245 basis points in June, the widest it has been in more than 15 years.