Asking price reductions continue to stimulate demand in transaction volumes in prime central London with a steady recovery through the summer, according to Knight Frank’s research.

The number of residential exchanges was 5% higher in the first seven months of 2017 compared to the same period in 2016.

With political uncertainty surrounding the general election and Brexit talks causing a modest decline in sales volumes since April, there was a 21% volume increase in June and July compared to 2016.

This reflects the underlying trend of a market that has balanced out in 2017, though the process has not taken place in a uniform way across all markets and buyer sensitivity to price remains high.

As demand and activity steadily rise, price declines continue to reveal evidence of bottoming out. Average prices fell by 0.2% in August and annual growth was clipped to 5.4% – the lowest rate since November 2016.

An analysis of growth by price band shows that higher-value properties performed better than lower-value properties for the sixth consecutive month as the market adjusts to higher rates of stamp duty. Prices between £5 million and £10 million fell 3.7% in the year to August 2017 compared to the overall market decline of 5.4%.

Furthermore, demand indicators reveal a development in forward-looking data, with an 8% rise in the number of prospective buyers registering between January and August 2017 compared to the same duration last year. Viewing levels were up by 14% over the same period.

Over the first eight months of the year, the supply of new stock was 17% lower than 2016. This decline is the result of a surge caused by a stamp duty hike in April last year. The overall level of stock level was 9% higher at the end of August than the same point in 2016.

The impact of political events and stamp duty changes means a contrast of market performance in 2017 with previous years is complicated. An improvement on last year is clearly visible, although any recovery in line with the forecast for a broadly flat price movement this year remains relatively shallow.