■  A decisive election was expected to boost confidence in the prime London market, but it remains relatively price sensitive, particularly in higher value submarkets. In the aftermath of the election prices across prime London rose by 2.3% on average, having fallen by 1.4% in late 2014.

■  This reflects the increased transaction costs resulting from successive reforms of stamp duty, and, in the more domestic markets, the ongoing impact of the Mortgage Market Review. It will take time for the market to adjust to these additional constraints before the fundamentals of demand for prime property restore growth.

■  This will moderate price growth. As such, we have pushed out our five-year forecasts by a year to 18 months, with the expectation that price growth to the end of 2020 will average a total of 21.5% in the prime central London market.

■  Areas where the average sale price has recently exceeded £1m include Earls Court, Victoria, Highgate, East Sheen and Dulwich.

■  Over the medium term we expect to see the area defined as prime grow and evolve, particularly in line with the changing nature of wealth generation in the capital. Regeneration and infrastructure improvements are likely to continue this trend over the longer term.

■  In brief, the fundamentals of wealth generation support medium term price growth. However, this is likely to be muted in the short term as the market, which currently looks fully valued and fully taxed, adjusts to a new fiscal and regulatory backdrop.

^{NB: These forecasts apply to average prices in the second hand market. New build values may not move at the same rate}
Source: Savills Research