With more luxury listings than any other city, as well as the world’s second most expensive residential sale in 2015 ($141 million/£92 million), London retains its position as the most luxurious property market worldwide. As the sole UK affiliate of Christie’s international Real Estate, Strutt & Parker’s average market sale price in the capital last year was $2,356,292 (£1.6m).

In spite of slower growth due to new taxes on prime property purchases, the city continues to attract strong domestic and international buyer demand. The starting benchmark for a luxury home in London is now considered to be $7m (£4.77m) compared to $2.2m (£1.5m) worldwide.

Despite its high ranking, London’s high-end property market is currently experiencing a slowdown after a period of 18 months of political uncertainty and changes to its property tax regime. The possible introduction of a Mansion Tax prior to the 2015 General Election, changes to Stamp Duty Land Tax introduced in late 2014 and further changes to taxes on additional homes over £1.5m in April 2016 were all named as causes in the report.

Lulu Egerton, Partner at Strutt & Parker, said: “These changes have understandably impacted the luxury London market at every level as people take stock and take longer to make decisions. However, they have not stopped buyers purchasing our very highest quality properties as London remains a fabulous city to invest in and a very attractive place to live. Prices have gradually been adjusting to absorb the extra taxation and are now at a stable level.”

The report also highlights that new residential developments in London have successfully contributed to ameliorating the inventory shortage without overwhelming the market.

Lulu Egerton continues: “Our most exclusive residential development schemes in prime central London continue to attract significant attention and high prices, while the second-hand market hasn’t demanded the same kind of response.”

On a global scale, a ‘return to realism’ is named as the key finding of the 2016 edition of the Luxury Defined report. After beginning 2015 with the breakneck pace of 2014, international luxury housing in major markets experienced an overall normalisation in luxury residential real estate growth rates and pricing in the second part of 2015 and into 2016.

“Real estate in the world’s top markets continues to be an important part of a globally diversified investment portfolio,” Dan Conn, CEO of Christie’s International Real Estate said. “Other markets that were off the radar screen have also become increasingly attractive as an investment opportunity as buyers seek out favourable risk adjusted returns.”

Christie’s International Real Estate is wholly owned by Christie’s and is committed to its core values of expertise in marketing luxury assets, exemplary client service, and discretion. The Luxury Defined study can be accessed here.