Prime London property on the slide

Prices for prime central London property have begun to fall, according to a report from Savills.

Properties costing over £1 million have seen prices dip by 1.5 per cent over the first quarter of 2008 finds research from the estate agent.

This follows a two per cent fall in the market over the final quarter of last year.

The fall is attributed to the global liquidity freeze, which has made mortgage finance increasingly difficult to obtain.

While the super-prime market continues to thrive – as purchases are less likely to require borrowed finance – it is those on the second rung of the ladder who are suffering most.

Savills finds prices for properties priced over £4 million in London saw a 1.7 per cent increase over the first quarter.

Outside of London the market is proving more resilient, with a drop of just 0.5 per cent recorded over the first three months of the year.

This compares to a 0.9 per cent year-on-year drop recorded by Halifax for the whole UK property market in April – the first time prices have dropped over a year in more than a decade.

The larger drop in the upper echelons of the London market can also be partially attributed to wider economic turmoil, explained Lucian Cook of Savills.

City bonuses have been curtailed amid the current economic climate, while those in the financial sector have also seen severe job losses in some areas.

This has reduced demand for the more expensive properties.

"The £4m-plus homes have done well as the global rich are pretty insulated from the rest of the market, whereas the problems in the City have been acutely felt in the £1m to £4m housing market," Mr Cook said

Sales volumes were down in the London market by more than a third in the first quarter, finds Savills.

Chris O'Toole