Meanwhile, it is predicted prices will increase by 13% over the next five years in Prime Outer London.
House prices in Prime Central London (PCL) will rise by 18% over the next five years and by 13% in Prime Outer London, Knight Frank has predicted.
The estate agent said there will be more modest growth in the short-term as the threat of a no-deal Brexit persists.
It said this is combined with the possibility of stamp duty changes, the erosion of the Sterling discount and the normalisation of interest rates.
David Hollingworth, associate director of communications at L&C Mortgages, said: “I think there will be a lot of focus on the short-term initially as we don’t know how homeowners will react to their current situation with Brexit.
“It sounds like Knight Frank remains confident of the fundamentals of the London market and that demand will remain in the long-run.”
Knight Frank said price growth will then pick up before moderating in 2024, the year of the next election.
There were 18% more exchanges in the first eleven months of 2019 in PCL than the equivalent period in 2015.
Buyers have responded to the repricing that has taken place, the Sterling discount and low mortgage rates.
The overall number of £1m-plus listings in PCL during November was 17% lower than it was in the same month last year.
Knight Frank forecasts cumulative rental value growth of 11% in Prime Outer London and 10% in PCL over the next five years
Increased private investment and public spending are likely to stimulate tenant demand as the economy strengthens.
But Knight Frank also reports that there will be downwards pressure on supply as more meaningful house price inflation returns to the sales market, prompting more owners to sell.
It expects this lack of supply to have a more marked impact in lower-value lettings markets.
The number of new rental listings in PCL declined 8% in the year to November compared to the previous 12 months.
Meanwhile, the decline in Prime Outer London was 14% over the same period.
Knight Frank expects this trend to accelerate in 2020 in response to an anticipated bounce in the sales market.
