Prices for prime property in central London (valued over £2m) grew 0.6% on a monthly basis during February, according to Knight Frank, which added that February’s annualised figures show that prime central London property continues to rise albeit at 23.8%, the slowest rate since August 2007.

Liam Bailey , head of residential research at Knight Frank commented: “At a time when uncertainty continues to swirl around the financial market’s on which London’s prime market relies, February’s growth rate of 0.6%, which is also the monthly average for this sector over the last six months, demonstrates a degree of resolve.

“The three monthly growth rate of 2.8% also strikes an optimistic note for the prime market. However, on an annualised basis the long-term trend is that of a continued slowdown, with the rate now at 23.8%; its lowest point since the heights achieved in the late summer of 2007.

“The chief hotspots in February were Kensington and Chelsea which recorded above average monthly growth rates of 1% and 0.7% respectively. Chelsea also demonstrated that it remains one of the most sought-after areas of London with an annualised prime property inflation rate of 30%; fractionally ahead of Mayfair where comparable properties increased in value by 29.7% over the last 12 months.

“After a troubling few months the government’s decision to amend capital gains tax from its present rate of 40% down to 18% from April will help underscore these modest improvements in tough market conditions. To those who have been seeking a way of capitalising their property assets for whatever reason, this will come as very timely news. If the chancellor also uses his budget report on 12 March to increase the zero rate of stamp duty land tax from £125,000 as some have suggested, the outlook will be better still, but in the current financial climate this is by no means certain and especially at this end of the market. We’ll have to wait and see.

“Vendors and purchasers alike will be watching this week’s monetary policy committee’s decision on base rates very carefully. While those buying prime property are less reliant on mortgages than those in the wider market, a further cut to the base rate would be very well received, especially at a time when mortgage approvals have fallen radically in recent months.

“We stand by our earlier assessment that this market should grow by 3% over 2008, though we should emphasise the caveat that with economic uncertainty dominating the minds of purchasers the sector remains finely balanced.”