The price of a luxury home in the heart of London is set to climb 20.5 per cent over the next five years after a prolonged spell of sluggish sales and discounting.

Property values are predicted to rise six per cent in 2021, four per cent in 2022 and 2023, and two per cent in 2025 in the capital’s exclusive locations of Belgravia, Knightsbridge, Mayfair, Kensington and Chelsea, Marylebone and Notting Hill.

A hike in stamp duty on multi-million pound homes and Brexit-related uncertainty caused prices to be slashed by a fifth on properties worth more than £2.75 million over the last few years.These falls will now reverse as luxury dwellings appear to be good value.

Overall, the average house price in the UK will rise 15.3 per cent over the next five years to £266,000 with the North West, Yorkshire and Humberside, Scotland, the North East and the West Midlands to lead the regional recovery. Markets further from the capital, such as Leeds, Liverpool, and Sheffield, were much slower to recover after the financial crisis and have greater scope for house price growth relative to incomes, even as interest rates rise.