House price falls in prime central London (PCL) may have bottomed out while rental declines have also slowed, Knight Frank claims.

The agent’s October PCL sales index found that prices fell 3.6% annually, the most modest drop in a year.

However, Tom Bill, associate at Knight Frank, said the market remains stratified, with properties worth £5m plus recovering more quickly than the rest of the market.

Average prices for homes worth more than £10m declined by 2.8% in the year to October, compared with a 4.8% decline for homes priced at between £1m and £2m.

Bill said: “This indicates that Stamp Duty changes are starting to become more fully assimilated into pricing in this part of the market.”

Using data from LonRes, Knight Frank said PCL sales volumes were up 12.4% in the three months to September compared with the same period in 2016.

The agent said it expects sales volumes to remain below their historical rates as Stamp Duty continues to impact on trading volumes and general market liquidity.

There was a 5.3% rise in the number of prospective buyers registering between January and September compared to the same period last year, while viewing levels were up 10.1%.

But while demand is rising, Bill said the level of new stock coming to the market has declined, further underpinning the current price trends.

Knight Frank also found that average rents in central London declined, but at a slower rate if 2.5% year-on-year in October.

Separately, another high-end agent, Strutt & Parker, has reported a rise in transactions this year, but says the London market still isn’t pulling its weight.

Guy Robinson, head of residential agency, said transactions were up 8.3% annually so far this year, but the most valuable players are outside the capital.

The agent’s third quarter residential report said national house prices are now 13.9% above the 2007 peak, based on Nationwide figures.

However, during the third quarter, London prices fell 0.6%, while the best performing region was the east midlands with growth at 5.1%, closely followed by the south west at 4.7%, the analysis said.

Strutt & Parker said transactions in prime central London remain “considerably below” the five-year average, with sales dominated by the sub £2m bracket in the third quarter of 2017 and lower levels of transactions for higher prices.

The agent is forecasting no growth in prime central London next year as a best case scenario, with a worst case scenario of a 5% drop.

It is forecasting 2.5% growth across the rest of the UK.

Over five years it is anticipating 18% price growth across the UK, and 23% in PCL as a best-case scenario.