After three years of price falls, there are signs that prime central London housing values may be bottoming out. Values in the UK capital’s most expensive central locations slipped a marginal 0.9 per cent in the final quarter of 2017, while annual price falls totalled -4 per cent, in line with our expectations.

The Savills research view is that prime central London is ahead of the curve in adjusting to current market conditions. Values are on average 15.9 per cent below their 2014 peak, ahead of the first significant stamp duty increase.

But the rate of price falls has slowed and values are now finding a level, albeit no growth is expected for the next two years.

In contrast, the more domestic outer prime London markets have not seen values fall to the same extent as the higher value central locations over the past few years. But further small falls are expected this year, with significantly lower five year house price growth.

But what buyers and sellers want to know, of course, is what happens next.

Forecasting house prices is never completely straightforward, but the current backdrop of political and economic uncertainty in the UK only increases the challenges. Getting it right presupposes that we are making the right economic assumptions, can predict policy direction and have the ability to anticipate the fickle nature of buyer sentiment.

We don’t have space here to set out all the factors that we do know, or can predict with confidence. But suffice to say, we at Savills base our forecasts on a wide range of indicators, including a detailed knowledge of previous housing market cycles.

So, in a few words, I will attempt to summarise what we think is in store for the UK capital’s prime residential markets. Having seen double-digit falls since the stamp duty rises of late 2014, house prices in London’s prime central locations are beginning to find a level.

But uncertainty over the impact of Brexit points to two further years of no growth. Thereafter, when uncertainty clears and central London’s prime residential real estate again represents identifiably good value, prices will bounce.

By the end of 2022, we expect values across the city’s most established core prime central zones to have risen by a fifth (20.3 per cent).

While this may look ambitious in the current climate, it represents a departure — likely permanent — from the historic trend, which saw average annual price growth of 5.7 per cent above the rate of inflation between 1979 and 2014.

During that period London was transformed from a purely domestic market in the pre-Thatcher years, to one of the world’s leading global cities. This rocket-fuelled promotion phase cannot be repeated, but London can — and we believe it will — retain its position among an elite group of world cities, valued for its low risk status.

The wider prime London market is more dependent on domestic buyers employed in the financial and business services sector, for whom mortgage affordability is more of a concern. This will constrain price growth, which is projected to total 10.2 per cent, with modest 2 per cent fall across 2018.

We think the risks regarding London’s position as a global commercial centre have been overplayed. Whatever the challenge from other cities, London will almost certainly remain a key global financial centre and develop as one of several European hubs for the growing tech sector.

Its prime markets will therefore benefit from new domestic wealth generation as well as attracting wealthy international buyers.

The writer is the UK Head of Residential Research at Savills.