Transaction levels in Prime Central London (PCL) increased for the third consecutive quarter during Q1 2017, according to Strutt & Parker.
However, transactions are still significantly below the 2014 peak and even figures for early 2016.
Transactions in the sub-£2 million market dropped by 32% when compared to the same period last year, while transactions for the entire PCL market were 27% lower during the same period.
It's likely that the higher figures recorded in the first three months of 2016 are due to the rush to beat the stamp duty surcharge introduced last April.
Vanessa Hale, partner in research at Strutt & Parker, says that by the end of 2016, average prices in PCL were 13% lower than their 2014 peak.
What's more, nationwide house prices outperformed prime London significantly.
"The first quarter of 2017 has seen a slight upturn in purchaser activity and realistically priced, good quality stock is selling reasonably well,” says Hale.
Guy Robinson, head of regional residential agency at Strutt & Parker adds: “The main drag on the market is the time it is taking for transactions to go through – currently around 12 weeks on average.”
He says more legislation and an increased number of hoops to jump through is elongating the process.
In the PCL lettings market, the take-up of new rental tenancies increased by 22.0% in Q1 2017 compared to the same time last year.
Strutt & Parker and its economic forecaster Volterra are predicting house price rises of 3% across the UK in 2017, with flat growth of 0% in PCL as a ‘best case scenario’.
“It is likely that much of the downward pressure on PCL house prices because of Brexit and Stamp Duty changes has already been experienced," concludes Hale.
"Although we continue to be mindful of the political uncertainty in the UK and across the globe when forecasting.”