Pricing on prime central London (PCL) properties has “more than” adjusted to take into account the higher transaction costs with average asking prices discounted by up to 10%, Knight Frank claims.

The agent’s February PCL Sales Index highlights LonRes data showing that the average asking price reduction for sales between £1m and £5m was 9.9% in the year to February.

Knight Frank could not say whether these discounts have led to sales, but there was a 2% increase in its own sales volumes in the year to February.

The number of prime properties on the market also increased 5.4% over the same period.

Tom Bill, head of London residential research for Knight Frank, said: “The impact of Stamp Duty has been substantially absorbed and is now an accepted cost of transacting.”

The index found that average PCL prices fell 1.1% in the year to March.

In the PCL lettings market, Knight Frank found that rental values fell 1.5%, the most modest rate of decline in almost two years, while rents were up for the first time since September 2015 by 0.2%.

However, the number of new lettings listings fell 5% in the year to February, the largest such decline since July 2015.

Knight Frank attributed the fall to increased confidence in the sales market, and it said: “Pricing in the sales market has shown increased signs of stability as Stamp Duty hikes have become more fully absorbed.

“Political uncertainty means the market is not set for an upswing in the short term, but signs of stability are likely to have caused some property owners to explore the option of a sale.

“The other reason behind this trend is the succession of tax changes in recent years, which include a Stamp Duty surcharge and tighter restrictions around tax relief and other allowances for landlords.”