They say a week is a long time in politics. When the political backdrop is uncertain, three years can seem like an eternity in the prime housing markets.

A lot has happened in that time. Two general elections. Changes in the leadership of all of the main political parties. A vote to leave the EU.

This level of political uncertainty alone would be enough to make buyers cautious. But, there has also been a series of stamp duty increases and, for those buying an additional home, a further stamp duty rise.

Prices in central London are now 15.2% below their peak of three years ago. With a snap general election and a hung parliament forerunners to the start of Brexit negotiations, prices have fallen 3.2% in the first nine months of this year.

Elsewhere across London, the price adjustment has been less significant. This reflects less exposure to stamp duty and other tax changes. But, as price growth in the mainstream London markets has slowed dramatically, so prices in the prime markets along London’s wealth corridors have softened, falling 6.5% since September 2015.

In both cases, the effect of mortgage regulation has been felt – a factor that is less relevant to prime central London. The hint of interest rate rises has not helped sentiment, even though those rates are coming off unprecedented lows.

^{Source: Savills Research}

With much lower levels of price growth in the run up to the past three years, prime markets beyond London have been more resilient. Still, in the past year, they have struggled to deliver any meaningful price growth, whether in the commuter belt, the increasingly fashionable uber-towns, the second-home hotspots or the rural idylls.

Across all, the market has become much more needs-based. This is reflected in less stock being brought to the market. Still though, some sellers are happy to chance their arm and see if they can turn back the clock to 2014. Few have succeeded.

So, optimistic asking prices are being cut with increasing regularity. In these cases, properties are continuing to sell, as shown in our £1 million+ activity tracker which is based on marketwide information from TwentyCi. This suggests the prime market remains price sensitive, but far from dormant. Much like the curate’s egg, it can be deceivingly good in parts, but this should not detract from sellers having realistic price expectations.

^{Source: Savills Research using TwentyCi}

Over the next three years, as the political and economic implications of Brexit become clearer, there will be more change. The prime markets will probably take their lead from the central London market. Here, depending on the underlying conditions, sentiment can spin on a sixpence.

For now, and through 2018, a pick-up in sentiment seems unlikely. Much, then, depends on the economic outlook. But after the period of adjustment and sobriety already seen across the prime markets, we are forecasting a return to growth.

^{▲ The Boltons, Chelsea}

^{Source: Savills Research using TwentyCi}