House prices fell for the third month in prime central London by 1,3%, bringing prices into negative territory for the first time since 2003, with homes now worth 1,6% less than a year ago according to Knight Frank’s latest report.

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The market is now completely divided between prime and super prime, with houses over £10m now detached from the rest of the market with prices rising by as much as 2.9% in August, putting annual growth at 19%.

Properties in Mayfair are also weathering the storm well, with annual growth still registering at 10.3%. The rule seems to be the cheaper the property the more vulnerable it is to falls – properties worth under £1m are now worth 9.2% less than a year ago, the report continues.

Liam Bailey, Head of Residential Research for Knight Frank said; ‘Prices in the capital’s most expensive areas have now reverted to approximately the level they stood at in July 2007, following four consecutive months of falling prices, although this month’s fall of 1.3% was slightly lower than those recorded in July (1.6%), June (1.7%) and May (1.5%).’

‘However, performance is by no means uniform. More expensive properties, notably houses, continue to hold their value far better than cheaper properties, which in prime London tend mostly to be flats. For properties priced between £5m and £10m, for example, prices are still 1.3% higher than a year ago – but for homes worth under £1m values are now 9.2% lower than in August 2007. Nevertheless, prices fell during August for all categories below £10m.’

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