Londons most expensive residential properties (homes that cost more than £5m) are set to appreciate by 12% in 2007 compared with 25% in 2006, according to Knight Frank.

Liam Bailey, head of residential research at Knight Frank, said: "This years bonus round for bankers, traders and fund managers may be the key as that is the main driver for prime property prices."

The Center for Economics and Business Research expect city bonuses to rise by 8% from 2005s record 7.5bn.