London luxury market takes a hit

Luxury homes in central London had the smallest annual increase last month since December 2009 on a decline in the Knightsbridge area, the site of Christian Candy's One Hyde Park complex, Knight Frank said.

The average price of a house or apartment in the city's most-expensive neighbourhoods climbed 7.2 per cent from a year earlier, according to data from the London-based broker.

The monthly increase of 0.3 per cent was the smallest since December and Knight Frank said it expects little change for the whole of this year.

The market for luxury homes in London is cooling at a time when prices for less expensive properties are picking up, helped by a credit-boosting programme by the Bank of England and the UK Treasury.

While demand for prime real estate remains strong, Knight Frank said would-be buyers of homes valued at as much as £2 million (HK$23.6 million) are becoming more price sensitive.

"There is a discernible shift in the market," said Liam Bailey, head of residential research at the London-based firm, in a report.

Anecdotal feedback confirms "that buyers are willing to agree to purchases, but only when prices are realistic", he added.