The prime London property market has improved over the last 12 months as the economic backdrop stabilises, Knight Frank data reveals.

The data shows the number of transactions was 14% higher across the capital in the three months to July, while the rise was 3% in prime central London (PCL).

Activity was subdued last year after the introduction of Donald Trump’s trade tariffs, the ending of non-dom status and speculation around property taxation in the autumn Budget, but Knight Frank head of UK residential research Tom Bill suggests this year the backdrop has been quieter.

New rates of high-value council tax announced in November weren’t as bad as feared, according to Bill, which enabled buyers to make plans after the Christmas break.

The number of offers made in prime central and prime outer London by March was 8% higher than last year, which has translated into more activity this summer.

While there is still speculation ahead of October’s Budget, Bill says it has been more muted this year, particularly after new Prime Minister Andy Burnham ruled out a land value tax.

Exchanges are 7% lower in both London and PCL over the last three months.

Compared to the five-year average, exchanges are down 6% in London and 15% in PCL.

However, Bill explains that the comparison is distorted by a series of stamp duty cliff edges during and after the pandemic as well as the sharp re-pricing of mortgage rates that began in 2022.

But the absence of bad news means demand is strengthening, according Bill.

This shows as average prices in PCL have fallen by 23% since their last peak in mid-2015 due to a succession of tax increases and political uncertainty.

Average prices in PCL fell 3.3% in the year to July, which marked the 39th consecutive month of annual declines.

Prices rose modestly over the two years to April 2023, but that followed a 59-month period of declines that ran from June 2016, while prices have been steadier in prime outer London.