Knight Frank claims there is “pent-up” demand for property after finding the number of prospective buyers per property in prime London has hit a two-year high.

Analysis by Knight Frank found the number of new prospective buyers rose in the final quarter of 2018 to the highest figure since 2016.

The agent also found properties are selling faster in the capital’s prime areas, while average prices fell 4.6% annually in 2018, in what Knight Frank said was a sign that buyers and sellers were adjusting to higher transaction costs and political uncertainty.

In prime London lettings, Knight Frank warned that an exodus of landlords pushed the number of new rental listings down 13% over 2018, while the total number of properties available for rent declined by 20%.

The decrease in supply meant rents were pushed up 1.3% annually in prime central London (PCL).

Meanwhile, analysis by Strutt & Parker claims total transaction levels in prime central London continued to fall in 2018, declining 9% annually in the final three months of the year.

It said transaction volumes are now almost 50% lower than they were five years ago across the market.

The agent said the sub £2m bracket still dominates transactions in the area, but it has fallen from representing around 80% of the market a decade ago to 70%.

It said PCL prices dropped closer to its downside forecast of 5% last year and predicted 2% growth at best for 2019.

The agent is predicting annual house price growth will be at 2% across the UK this year and 4% each year until 2023.

In lettings, the take-up of new rental tenancies across PCL also decreased by 5.4% annually in 2018 and Strutt & Parker is expecting rents to increase by 1.5% annually this year and 2% in 2020 before hitting 2.5% in 2021.

Vanessa Hale, director of research at Strutt & Parker, said: “Appropriate pricing and the continued attractiveness of sterling will continue to be key factors affecting market activity levels in the higher price sectors. There is the possibility of further price decreases in 2019 as globally and domestically the economy and political environment remain volatile.

“Beyond 2019 it is extremely difficult to forecast this market with any certainty but we would expect some bounce-back once more stability has returned.”

Louis Harding, head of London residential sales at Strutt & Parker, said: “Although transaction levels in PCL have remained low overall, across our London offices we ended 2018 with volumes up by just over a quarter year on year.

“Moving into 2019, there are some signs that sentiment may be improving. Savvy purchasers who have been trying to call the market are sensing that now could be the right time to secure a property in the capital at a sensible price.”