Prime Central London residential prices increased by 0.3 per cent in May and are up 3.2 per cent so far in 2013, according to Knight Frank, the global real estate consultants.

Over the past 12 months, price growth in Prime Central London has totalled 7.2 per cent. The biggest price rises during April were seen in City Fringe (2.6 per cent), Notting Hill (1.2 per cent) and Kensington (1 per cent), the firm said.

Prices for London’s finest bricks and mortar continue to rise and now stand 58 per cent higher than the market low in March 2009. But as Liam Bailey, global head of Knight Frank residential research confirms, there’s growing evidence that buyers are less willing to commit to homes with "over-ambitious price tags".

“In May, property values in Prime Central London rose by 0.3 per cent month-on-month. Prices have now climbed 3.2 per cent so far this year and are 7.2 per cent higher on an annual basis. Demand for the very best London homes remains strong, with the number of new applicants 40 per cent higher between January and April compared to the same period in 2012,”said Bailey.

Across the wider Prime London market, Knight Frank recorded a 17 per cent rise in sales, compared to the same period last year. This, the firm says, is concentrated in the lower price brackets, with a 28 per cent rise in sales of homes with a value of under £2 million (around $3 million).

Meanwhile, the super-prime (£10 million+) sector saw an initial decline in year-on-year sales in January and February, overturned by a strong 57 per cent annual rise in sales in March and April.

“The strength of the sub-£2 million sector provides one indication that buyers are becoming more price sensitive. In addition, our index results showed modest price falls in Belgravia and Knightsbridge (0.2 per cent and 0.3 per cent respectively) in May, despite strong demand. 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,” said Bailey.