The average price for luxury London properties rose by 0.4 per cent at the beginning of the year, while the annual decline in prices stands at 3.2 per cent, compared to 3.8 per cent at the end of 2012, according to Knight Frank, the global real estate consultants.

Findings from the firm’s latest prime country house index shows that while prices of sub-£2 million and £5 million+ properties rose at the start of the year, values continued to drop for houses worth £2 to £5 million.

"While average values of sub-£2 million prime properties climbed between January and March, the value of houses worth between £2 million and £5 million continued to fall, taking the combined annual decline in this price bracket to 4.2 per cent. The higher 7 per cent stamp duty charge for £2 million+ properties, introduced at last year’s Budget, remains a key factor in this ‘multi-speed’ market, and agents report that faltering confidence on city jobs and bonuses is also having an impact,” said Gráinne Gilmore, head of UK residential research.

“Moving up to super-prime £5 million+ homes however, the picture changes again. Prices for homes in this band rose in the first quarter, continuing the upward trend seen since mid-2011 amid increased competition for super-prime properties as more international buyers enter the market. The weakness of sterling coupled with the decline in values seen over the last few years have combined to make prime country property an attractive investment for those buying in foreign currencies,” said Gilmore.

Meanwhile, some 55 per cent of £5 million+ homes were sold to overseas buyers in 2012, up from around 40 per cent in 2011 and 2010. One in four homes was bought by a buyer from Russia or CIS, while European buyers accounted for around one in ten purchases. The Home Counties remained the hotspot for super-prime country house transactions last year, with 82 per cent of all such sales happening in these counties. This is up from 76 per cent in 2011, the firm said.