London's exclusive property prices given a reality check

Even the wallets of wealthy buyers are showing the strain of London's inflated property market, with prices falling in Knightsbridge and Belgravia.

The estate agent Knight Frank said its latest prime central London survey showed prices up 3.2 per cent this year and 58 per cent higher than the market low in March 2009.

However, they eased 0.2 per cent in Belgravia and 0.3 per cent in Knightsbridge during May as a dose of realism entered the market and Knight Frank has also seen much more interest in properties valued below £2m, avoiding the Chancellor's Budget stamp duty hike.

Liam Bailey, the head of residential research, said: "There is a discernible shift in the market, with anecdotal feedback confirming that buyers are willing to agree to purchases, but only when prices are realistic."

Sales of London prime property rose 17 per cent in the first four months of the year, but the rise was concentrated in lower price brackets. Sales of homes worth less than £2m rose 28 per cent over the same period.

Demand for luxury flats – such as the Candy brothers' One Hyde Park development – is stronger, with prices 3.5 per cent higher than at the start of the year. Price growth for houses has been more muted over the same period, rising by 2.6 per cent.