Prices at the top end of the central London property market fell in September for the first time since June 2003, Knight Frank has revealed.

The top end of the London market has been slowing down since June, following strong performance in the first half of 2004, when average prices for prime London properties increased by 4%, Knight Frank said.

According to the estate agent?s figures, properties valued at over £3m, which are increasingly sought by international buyers, have shown resilience, with prices increasing by 1%.

However, below the £2million mark, interest rate rises have had more of an impact, as a higher proportion of these properties are funded through mortgages. Values in this sector fell by 0.6%.

Once fashionable areas Kensington and Notting Hill have suffered the most, where average prices fell by 1.2%, while the current dearth of quality flats and apartments on the market has meant that their values are falling slower than house values.

Noel Flint, Partner in Knight Frank?s Sloane Avenue office, said: ?The small reduction in the Index reflects the air of uncertainty currently pervading the market. However, this is a small fall and if the current shortage of quality property continues, it is hard to see how prices will fall any further.

?We have an unprecedented level of enquiries for properties at the top level of the market, which demonstrates that London is still regarded as the leading residential address in the Western World.?