The latest indicator from property consultancy Knight Frank shows prices dropped 1.3% in August. Homes are now worth 1.6% less than a year ago, the Knight Frank report says.
These includes homes in Mayfair, St John's Wood, Regent's Park, Kensington, Notting Hill, Chelsea, Knightsbridge, Belgravia, the South Bank from Westminster Bridge to Tower Bridge, Canary Wharf, Hampstead, Richmond, Wandsworth, Wapping and Wimbledon.
The super-prime sector, homes worth £10 million or more, has become completely detached from the rest of the market, with prices rising by 2.9% in August alone, contributing to annual growth of 19%, the report has found.
Properties in Mayfair are also weathering the storm better, with annual growth still registering at 10.3%. But the cheaper the property, the more vulnerable it is to price falls. Properties worth under £1 million are now worth 9.2% less than a year ago.
'For the first time since 2003, annual price growth for prime residential property in Central London has dropped below zero. Prices in the capital's most expensive areas have now reverted to approximately the level they stood at in July 2007, following four consecutive months of falling prices,' a spokesman said.
'However, performance is by no means uniform. More expensive properties, notably houses, continue to hold their value far better than cheaper properties, which in prime London tend mostly to be flats. For properties priced between £5 million and £10 million, for example, prices are still 1.3% higher than a year ago. But for homes worth under £1 million values are now 9.2% lower than in August 2007,' he added.
The report notes that the gap between super prime properties and the rest of the market is growing. This is because the credit crunch is not affecting the fortune of high net worth individuals while buyers of prime homes beneath £10 million are more affected by pessimism in the financial services sector and more vulnerable to the difficulties in accessing mortgage finance.
