Prime property prices in London take a dip

Prices for prime central London property have begun to fall, according reports from leading UK estate agents.

Properties costing over £1 million have seen prices dip by 1.5% over the first quarter of 2008, according to research from Savills. This follows a two per cent fall in the market over the final quarter of last year.

The fall is attributed to the global credit crisis 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 found prices for properties priced over £4 million in London saw a 1.7% increase over the first quarter.

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

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,' he said.

'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.'

A similar picture comes from Hamptons estate agents which reports that since September 2007, the value of £1m-plus properties has fallen by up to 15%.

And recent figures from the Land Registry showed that the number of homes sold for £1 million or more in January was 15% down compared with the same month last year.

The drop was even more severe in London where values were down 24%.

Last year, a luxury home took an average of 47 days to sell; it is currently at 76 days, according to Knight Frank.

Kate Moy, an analyst at Numis Securities, warned that the prime property market is set to see continuing falls. 'We're only talking about minor decreases, but I don't see an end to the attrition of prices for some time,' added Ms Moy.