Luxury London property hit by price decline

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Prices for property at the top end of the London market have fallen for the first time since 2003 as bonuses paid to City workers were reduced by the credit crunch, according to new figures.

Statistics published by Savills revealed a two per cent fall in prices in luxury property worth more than £1 million within the capital in the last three months of 2007, the Times reported.

However, Lucian Cook, a director of research at the property firm, told the newspaper that the fall was "no surprise."

And while he claimed that the fall in bonuses might hit the ability of landlords to undertake further buy-to-let investment, property in locations such as Fulham and Richmond still saw price increases.

"Like a second home, an investment property is the ultimate discretionary spend," Mr Cook explained.

Savills expects central London property prices to recover quickly, to increase by five per cent over the course of 2008, while Knight Frank told the Times that they expect an above-average price increase for the area.

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