The Knight Frank Prime Global Cities Index tracks the movement of luxury residential property prices across 41 cities.

London sustained a 6.4 per cent drop in luxury property prices from March 2016 to March this year, and the result led to the city finishing 38th out of 41 cities in a global index that also showed Chinese cities had logged rapid price gains.

The Knight Frank Prime Global Cities Index tracks movement of luxury residential property prices across 41 cities. The index climbed 4.1 per cent from January 2017 to March 2017.

Chinese cities saw the biggest hike in prices; Guangzhou saw a 36.2 per cent increase and Beijng saw it luxury property prices swell by 22.9 per cent.

Other weak performers in the index, besides London, were Istanbul (-8.3 per cent), Moscow (-7.3 per cent) and Zurich (-7.3 per cent).

The report said that “although prime prices fell 6.4 per cent in London in the year to March quarterly, growth has climbed to its highest rate since May 2016, suggesting the capital is entering a period of stabilisation”.

London has been affected by a number of negative forces, such as uncertainties around Brexit, tax hikes on foreign-owned luxury homes, reductions in reliefs on buy-to-let properties, and the rollback of the non-domiciled regime that has been a benefit towards high net worth individuals resident in the UK. On the other hand, the fall in sterling immediately after the Brexit vote paradoxically has seen some foreign buying of UK property because of the exchange rate effect. 

Swedish capital Stockholm saw a price increase of 10.7 per cent year-on-year; with Berlin (8.7 per cent) and Cape Town (7.7 per cent) also having positive property market rises.

It seemed the result of Brexit did not affect luxury property prices in Edinburgh, which saw a 3 per cent increase. Dublin saw a 3.7 per cent rise for Q1 2017 from the same period last year.