Transactions started to increase in the three months to May, prompting claims that momentum is returning to the market.
Property adviser London Central Portfolio (LCP) said agents were reporting improved trading conditions and suggested investors in the capital are fed up with waiting on the sidelines for the Brexit uncertainty to clear.
LCP analysis of Land Registry data showed the number of transactions outside the capital in England and Wales increased by 10.4% on a quarterly basis during May, while sales were up 37.9% in prime central London (PCL) over the same period – the largest increase in activity for over two years.
The market in greater London was also up 13.8%.
However, sales in all three areas were still down annually.
Naomi Heaton, chief executive of LCP, said: “The ‘wait and see’ attitude, endemic since the EU Referendum in 2016, appeared to start turning ahead of the Brexit deadline of March 29, with investors wanting to capitalise on weak sterling and discounted prices.
“Whilst the extension of the deadline appeared to have initially dampened investors’ enthusiasm, there has been a notable change in market sentiment and several estate agents are reporting improved trading conditions.
“It would appear investors are no longer prepared to sit on the sidelines whilst the UK makes up its mind. Historically, the PCL market has bounced back swiftly when sentiment improves, so the window of opportunity to cut a good deal at rock bottom prices could well be a small one.”
The research also showed average annual prices reached a record high of £1.9m in PCL – up 8.2% annually – which LCP said was pushed up by the sale of several high-value properties in March and April.
Prices also reached a record high in greater London, up 2.5% annually to £628,283.
Areas outside London saw price growth hit its lowest level since 2013, up 3.5% to £254,839.
Heaton added: “Overall, England and Wales has turned in a more robust performance than the capital in recent times.
“The high purchase costs that have hit London hardest have not been felt as acutely, and with a smaller proportion of investors, transactions have been more resilient.
“However, any economic fall-out from Brexit is likely to have a far greater impact in England and Wales, which is primarily a domestic market, than in London, where the uncertainty has already been factored in.”