London to weather 2008 price falls

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The prime central London market will remain impervious to any falls in the market, thanks to continuing overseas investment, and "will return to growth certainly by the back end of next year", according to Savills.

Lucien Cook, director of research, said that areas outside the centre of the city might suffer however - although key commuter zones with high-quality housing will keep overall demand high.

"We're predicting growth in the prime central London market of about five per cent next year… To date, you haven't seen the reduction in prices or indeed the slowing in growth rates in London to anything like the same degree as some of the other areas in the country," Mr Cook revealed.

"There's going to be something of a flight to quality, so you would expect the commuter markets - which are a mixture of local demand and city money demand - to possibly be more robustthan some other localised markets [in the UK]; purely because you've got this extra layer of demand," he continued.

"That said, you will see a slowdown across the market."

The think tank Centre for Economics and Business Research has predicted that city bonuses will fall by 16 per cent - £1.4 billion - this year due to the credit crunch.

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