Prices of millionaires' homes are down again

House prices in London's most sought-after areas fell for the second month in a row in October.

Estate agent Knight Frank said prices in the central London market - including Kensington, Chelsea, Regent's Park and Mayfair - were down by 0.5 per cent following a 0.3 per cent decline in September.

It is the first time they have fallen for two months in a row since June last year, when confidence wobbled over the Iraq war.

The year-on-year rate of increase has slowed from 8.2 per cent in June to 4.4 per cent, and the sales price to asking price ratio from 95.4 per cent to

94.8 per cent.

Houses priced between ?2million and ?4million were hardest hit.

Liam Bailey, head of residential research at Knight Frank, predicts "flat growth" of four per cent next year.

The central London lettings market is continuing to recover with rents 4.3 per cent higher than last year - fuelled by savvy homeowners who sold at the top of the market renting temporarily in the hope that prices will collapse.