The prime central London market faces a number of short-term challenges. First, an increased tax burden needs to be absorbed. Second, economic forecasts, and therefore the potential for wealth generation, have been reduced not only in Eastern and Western Europe but also in areas of emerging demand through Asia.

This is likely to result in a period of static prices (though records will doubtless continue to be set in the ultra prime sector) before a return to price growth as the fundamentals of demand are restored from mid-2014.

We expect this to trigger a ripple effect through the prime regional markets as domestic buyers exploit the price differential compared to London, at a time when underlying economic conditions have improved.