Prices for Prime London property fell by 0.5% in June, the first monthly decline on the Knight Frank index since March 2009, although prices are still 23.4% higher than they were at their lowest point last year.

Prices now sit 6.1% below their March 2008 peak and price falls have been seen throughout the capital – with the remarkable exception of Mayfair which actually posted 0.2% growth.

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One of the main problems seems to be over-ambitious pricing of stock which puts asking prices as much as 10% above buyer expectations, says the agent.

Head of Residential Research Liam Bailey said: ‘The market experienced a severe lack of houses for sale during late 2009 and early 2010, which helped to push prices higher. Since May demand has fallen back by 8% – anecdotally price rises have begun to encourage potential buyers to think about renting again – and supply has also risen.

The healthiest parts of the market remain the entry level and the very top end – with prices only slipping by 0.2% in the sub-£1m and the £10m+ markets. The weakest markets are the mid-range £3m to £5m sectors, which had been the biggest price rises over the past 15 months.’

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