Values have increased over the past year for the first time since late 2014, before the stamp duty overhaul, though only by a marginal 0.5 per cent.
In particular, it warns that the prime central London flats market has lagged as it tends to be more dominated by those from overseas and those seeking a pied-à-terre for use mid-week.
Domestic buyers and London-based international buyers have focused their attention on houses with outside space in a bid to upsize during the recent race for space.
Savills expects prime central London prices to start rising more significantly in the second half of 2021 and end the year with 3.0 per cent gains – actually downgraded from the agency’s earlier 4.0 per cent prediction.
It says this will be followed by a strong 8.0 per cent bounce in 2022, prompted by increased international arrivals.
Frances Clacy, Savills research analyst, says: “While price growth has remained modest this year, there continues to be huge pent-up demand from those who have been restricted by travel over the past year. This suggests there is likely to be a rebalancing in demand once office-based workers return to their desks and international buyers are able to visit the capital more easily again.
“Buyers are well aware of the opportunity to be had while prices remain lower.
“The value on offer is significant in both a historical and global context in a market where values remain on average 20.3 per cent below their 2014 peak. We’re also seeing an uptick in demand for a wider variety of housing types in London as office workers return, and as a result, we expect the ‘window of opportunity’ to close quickly.
“The return to full international travel will still be crucial to the recovery in prices across the most central, high-value parts of the capital. The prospects of global wealth generation gives us confidence that the medium and long-term outlook is stronger. It remains the case of when, and not if, recovery takes place.”