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15:51 - 08-May-2008
Since last September their value has fallen by up to 15%, according to Hamptons.
By comparison, the average home which typically sold for £200,000 has dropped by only around three per cent.
The firm said a home which sold for £960,000 in the autumn would now fetch as little as £820,000.
Latest figures from the Land Registry show that the number of homes sold for £1m or more in January was 15% down on the same month last year.
In London, the fall was even more dramatic, down 24%.
Mark Anderson, managing director of Hamptons, which has 85 offices, mostly in the South East, said: 'The market is in a very different place from this time last year.'
Liam Bailey, head of residential research at rival estate agent Knight Frank agreed. He said: 'We are now in the grip of a major housing market slowdown.'
He added that last year a luxury home took an average of 47 days to sell. Today, it is 76 days before a buyer can be found.
Fears about the country's prime property were echoed by Savills, another upmarket estate agent.
In a statement to the Stock Exchange, Savills said it had seen prices fall in both London and the countryside, down 1.5% during the first three months of this year. It said the year is 'challenging', and said the 'current uncertainty' was to blame for a 'sharp' fall in the number of homes it is selling in London.
Hamptons said luxury homes are selling, but only if the owner accepts how dramatically prices have fallen since last summer's peak.
The problem is that many owners refuse to accept this fact, and demand an asking price which they have no hope of getting, it said. Mr Anderson said: 'There is homes sold for £1m or more in England and Wales in January still a market for houses with realistic guide prices. The right product at the right price and in the right place will sell.'
Kate Moy, an analyst at Numis Securities, warned that the prime property market is set to see continuing falls.
She said: 'We're only talking about minor decreases, but I don't see an end to the attrition of prices for some time.
'There will still be wealthy buyers, but there's a big gap emerging between what a seller expects to get for a property and what a buyer expects to pay.'
But the most expensive properties in Britain, which sell for £10m or more, have not been hit by the current market turmoil, Knight Frank said.
Mr Bailey said: 'The super-prime market has become pretty much the only bright spot in the UK over the course of the last six months.'
For these top-end properties, he said, prices have jumped nearly five per cent since the start of the year. Buyers in this sphere are often rich foreigners, unaffected by the mortgage drought.
The high street mortgage meltdown continued yesterday with Woolwich becoming the latest lender to demand a bigger deposit from new customers.
It doubled its minimum requirement from a five per cent deposit to 10%.
Woolwich, owned by Barclays, said it was a 'risk-based' decision amid falling house prices.
The Bank of England's monetary policy committee will today reveal whether it will cut interest rates again. It has already cut rates three times in five months.
If rates are cut today, it would be the first back-to-back rate cut since the aftermath of the 9/11 attacks on New York.
Yesterday's manufacturing output figures, which showed a fall of 0.5% in March, the sharpest rate of decline in six months, added to worries about the economy.
Last night economists were divided about whether or not rates, currently at five per cent, would be cut, saying the decision was too close to call.
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