Home sales in the UK fell in December and prices continued to drop in London's most prized neighbourhoods, despite rising in the rest of the country.
The Royal Institution of Chartered Surveyors (Rics) has said that expectations for sales over the next three months were "pared back" and that central London is the only part of the country where prices have been falling.
Only three per cent of Rics members said they expected house prices in central London areas such as Kensington and Chelsea to rise over the next three months.
The bleak outlook comes after estate agents Knight Frank said average prices on houses in central London fell by 4.8 per cent last year. In Chelsea, prices fell by 13 per cent.
Robert Green from London estate agents John D Wood & Co. said: "Investors and developers remain nervous. Supply remains limited as transactional costs deter all but the most determined of movers."
However, Rics have forecast that over 2017 as a whole, house prices in central London will stop falling as foreign buyers take advantage of the devaluation of the pound and snap-up high-end homes.
"Buyers are beginning to realise that they need to accept higher stamp duty than hope for any reduction," said Christopher Ames of property consultants Ames Belgravia. "Likewise vendors motivated to move are having to reduce their prices by at least half of the 15 per cent increase to conclude a sale."