According to research conducted by Knight Frank prices for properties in prime central London fell by 1.5% in May, which is the fastest rate of decline since the early nineties.

The research found that annualised growth continued to fall for the ninth month in a row (+12.8%) since being at its peak in August last year (+38%). Knight Frank also recorded which sectors faired best. In May the strongest performing sector was the +£10m, which saw no change in value, and the weakest sectors were the -£1m (-2.3%) and the £1- 2.5m (-2.2%). The figures for sales volumes were also down annually with a 50% fall, although there was some bright news for properties in the +£10m sector with an increase in sales volume of 40%.

Liam Bailey, head of residential research at Knight Frank, told PIN: “Although you have to be careful with any set of monthly statistics this is still a big drop. I believe that this is a correction to an overpriced market and I expect the fall to continue for the rest of the year, at best, I see a 5% fall in prices but a more realistic figure for the end of the year would be 10%.”

When PIN asked whether the figures were a precursor to recession, Bailey added: “This is the fastest rate of decline since the early nineties but the difference between now and then is that in the early nineties a recession was already underway, whereas now I think that this is a case of the housing market having overshot its self. I think that it is unlikely that their will be a recession.”