House prices in London have fallen for the fourth consecutive month, taking annual growth into negative territory for the first time in five years.
The cost of the average property declined by 1.3 per cent during August, according to the latest research from Knight Frank. This follows falls of 1.6 per cent in July, 1.7 per cent June and 1.5 per cent in May.
As a result of the fall homes in the capital are now worth 1.6 per cent less than they were ago the first time prices have fallen since 2003.
In August 2007 house prices in the capital were increasing at a rate of 37.9 per cent per annum.
reported prices across the country as a whole had fallen by over a tenth during the last year.
However, 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 £5m and £10m, for example, prices are still 1.3 per cent higher than a year ago but for homes worth under £1m values are now 9.2 per cent lower than in August 2007.
Nevertheless, prices fell during August for all categories below £10m, finds the estate agent.
"Over the past few months, we have noted 'super-prime' properties worth more than £10m have proved immune from the downward trends elsewhere," explained Liam Bailey, head of residential research at Knight Frank.
"There are now signs that the gap between this sector and the rest of the market is growing," he added.
A further casualty of the slowdown in prices has been transaction volumes, which are 46 per cent lower than at this time last year.
New instructions to sell have also dropped, with many potential vendors opting to stay out of the market, presumably until conditions improve, argues Knight Frank.