Prime residential prices in central London fell by 3.6% in November, the second largest fall on record after the decline of 3.9% in October according to the latest Knight Frank Prime London index. This puts prices 14.1% lower than last year, and the falls in the last three months alone now stand at 9.3%. Property prices in the capital have now been falling for eight consecutive months.

* Luxury property for sale in London

All areas and property types have been affected, says the report, with houses now depreciating faster than flats, which also means that areas like Prime North London are no longer outperforming the market.

Super prime property, although it weathered the summer well has now seen three months of consecutive falls and values are 7.5% lower than at the market’s peak in August, although houses over £5m are holding their value better than cheaper homes, the report states.

‘These dramatic falls may be painful to vendors, but prime London property is increasingly looking like very good value, particularly to foreign buyers who also benefit from the weak pound,’ said Liam Bailey Head of Residential Research at Knight Frank. ‘Indeed, a fall of 15% may translate to a fall of as much as 35% to someone watching the market from the USA, as the pound has fallen by 20% against the dollar since the beginning of the year. There has been an increase in interest from such buyers over the past few weeks, which has not yet been translated into activity.

‘Given the overall economic situation, we believe further price falls are to come. However, as many prime properties are unique and only occasionally come up for sale, we believe activity will increase as overseas buyers realise the home they have had their eye on for some time is now available at a much reduced price.’

* Luxury property for sale in London

Give the very best of British life this Christmas – a subscription to Country Life