The data from agents W.A. Ellis also show that there has been a 13% fall in sales in the second quarter of 2014 of properties priced over £10 million compared with the same period last year.
In the prime central London rental sector new tenancies are up by 84% compared to the same period in 2013 and the student market in full swing as demand exceeds supply.
The fall in the number of flat transactions could be down to concerns about a mansion tax which has not been completely ruled out by the government, according to Richard Barber, partner at W.A. Ellis.
He also pointed out that the trend shows that the achieved prices are below the original asking prices, and doesn't take into account any price reductions throughout the property's time on the market. Currently a fifth of all property on the market has had a price reduction at some point.
A breakdown of the figures shows that the average price per square foot paid on property above £10 million in prime central London increased by 31% from 2009 to 2013, however, in the second quarter of 2014 this fell to 5.7%.
There has also been a 13.6% reduction in instructions in the second quarter compared with the same period in 2013. In contrast, the sub £2 million market has seen an average price per square foot rise of 4.1% across London.
‘Over the past few weeks, we've exchanged on a wide range of properties, from a prime car parking space near the Albert Hall to the highly coveted Chester Street at £7,375,000. As we approach the autumn market, realistic pricing is key and serious sellers must look at recent sales evidence before they consider their asking price and not let agents talk them into marketing at a figure that will not be achieved,’ added Barber.
Lucy Morton, senior partner and head of lettings at W.A. Ellis, revealed that it has been the busiest start to a month the firm has ever known with regards to new tenancies, which have increased by 84% compared to the same period last year.
‘The seasonal student market is in full swing, with students focusing on finding accommodation for the upcoming year and demand exceeding supply,’ she said.
‘The family house market is also facing a lack of supply due to landlords selling because of uncertainty around a possible mansion tax. Landlords who choose to stay are benefitting, however, and this week we've seen three good Chelsea houses in Jubilee Place, Flood Street and Markham Square let within a week of reaching the market,’ she pointed out.
‘It is this level of the market that is most interesting and reflective of the recovering employment market. Corporate relocation budgets have increased, and we've seen the family house market rise by 3.4% in the second quarter of 2014,’ she added.
