The London property market is finally taking a breather after years of strong performance, with signs that buyers in prime central London are reluctant to pay today's inflated prices.
And rents across prime central London fell 0.5% in October, which means they have now have fallen 1.7% so far in 2013.
Yet London property prices are still growing despite the slowdown, up 0.6% in October, according to research from Knight Frank published today.
It means the capital's best homes have now grown month-on month for three consecutive years.
In prime central London residential property prices are up 6.8% over the last 12 months, although that is down from 10.1% in the year to October 2012.
The cheaper end of the market is growing more rapidly, with properties costing less than £2 million now 7.6% higher since the start of the year.
Prices have been driven upwards by the higher stamp duty charge for £2 million-plus properties, introduced at last year’s Budget.
But the higher level of transactions has hit stock levels for properties in this price bracket, which are 21.6% lower than in October 2012.
Prices for homes valued between £5 million and £10 million have increased by 3.8% in 2013 to date, while £10 million-plus homes have increased by 2%.
Liam Bailey, global head of residential research at Knight Frank, said: "In spite of new record prices we are seeing a moderation in price growth across prime central London following very strong performance over recent years.”
Rental growth in the capital has been lacklustre since 2011 and fell by 0.5% in October, the research showed. Yet demand for rented accommodation in prime central London remains high, with the number of new applicants registering their interest up 10% so far in 2013 compared to the same period last year
But there are areas of outperformance, with rents in the City unchanged in 2013 to date, and up 2.2% in Marylebone.
Bailey said: "The number of newtenants moving into prime rented accommodation in London over the two months to October 2013 was at the highest level ever.”
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