Hot on the heels of predictions by Knight Frank, the property firm, that prices for prime London residences will continue to rise despite a sluggish economic outlook, Savills has reported continued price growth in the UK capital, although at a slower pace.

Prime London prices - for districts such as Hampstead, Canary Wharf, Richmond, Putney, Chelsea and Mayfair - rose by an average of 1.1 per cent over the three months to the end of September – which is a sharp deceleration from the 6.4 per cent rise seen from January to June this year, according to Savills.

For prime central London (areas such as St John’s Wood, Notting Hill, Kensington, Marylebone and Mayfair), capital values rose 1.7 per cent in the third quarter of this year and rental values rose by 0.9 per cent, translating into year-on-year rises of 13.6 per cent and 8 per cent respectively.

The fashionable districts of central London – and some select other parts of the capital – have been a draw for investors from around the world, with some coming from regions such as the Middle East and North Africa where geopolitical risks have been on the rise.

In its analysis of where the purchasers came from, 58 per cent of prime London buyers were foreign nationals, with more than one in five buying for investment purposes, Savills said.

“Prime London property has seen a very pronounced recovery since the downturn and has so far escaped the `second slip’ seen in many mainstream and regional markets since mid-2010,” the report said.

To view the recent Knight Frank report on price trends and forecasts, click here.