According to Knight Frank’s Prime Central London Index, annual price growth for residential property dropped to -1.6% in August which was the first time that growth had fallen below zero since 2003.

Prices dropped by -1.3% in August, which was the fourth consecutive month of declining house prices. The average price of a home in prime central London now stands at £3.76m. Although prices continued to decrease, the rate slowed slightly from June’s figure of -1.7% to -1.6% in July.

The research found that the greater the value of a property the better it held its price. Those properties in the sub £1m price bracket were most at risk of decline, values were -9.2% lower than in August 2007, whereas homes priced between £5-10m remained +1.3% higher. Super prime properties, those in the £10m+ price bracket, continued to become even more separated from the rest of the Capital’s residential market. Price growth increased from +1% in July to +2.9% in August, and annual capital growth stood at +19% in August.

Liam Bailey, head of residential research at Knight Frank, told PIN: “It is very difficult to take too much from the monthly figures, as the trend is the important thing. I think that we will continue to see price falls for the rest of the year but the good news is that these could potentially be at a slower rate.”