London's luxury property market is suffering from oversupply this year after the government's stamp duty changes came into effect at the beginning of April.
The capital's rental prices on luxury properties have fallen by one per cent year-on-year in the first quarter, according to research from Knight Frank.
Knight Frank's index of prime residential rents found global prices fell by 0.5 per cent on average – the third consecutive quarter of deflation.
Buy-to-let landlords scrambled to snap-up second homes in London before chancellor George Osborne's stamp duty hike came into effect in April, leading to a spike of rental properties coming onto the market.
Knight Frank said this had led to a price drop, but that it would only be temporary.
Total rent yield in London – a combined measure of capital growth and rental yield – was 3.7 per cent, "outperforming benchmark hedge fund and stock market indices", according to the report.
The report said: "Uncertainty in global markets, partly as a result of Brexit, the US presidential election and the timing of the next US rate hike has led to investment decisions on a corporate level being put on hold as firms adopt a wait and see attitude."
London slipped to 11th in the index of 17 cities. Luxury rental prices also suffered in New York, where they fell by 2.3 per cent, and Geneva, where prices dropped by 4.4 per cent.
Deflation was particularly marked in Hong Kong, where prices fell by 5.2 per cent in the first quarter.