Property prices fell in prime areas of London by 5.7 per cent in Q4 2018 compared to Q4 2017, according to data collected by LonRes.
The back end of last year saw 56 per cent of properties undergo a price reduction before being sold.
In prime central London, £2.9bn of housing stock was sold in 2018, down from £3.5bn in 2017.
In addition, transactions were down 13 per cent in Q4 2018 compared to the end of 2017.
Furthermore, LonRes outlined the prime London letting market in its analysis, highlighting that in Q4 2018 average rents rose by 1.9 per cent.
Tenants negotiated an average of 4.9 per cent off initial asking rents over Q4 2018, down from 6.4 per cent a year earlier.
According to LonRes, 31 per cent of properties at the end of last year underwent a price reduction before securing a tenant, compared to 41 per cent in Q4 2017.
Nearly three quarters, 72 per cent, of agents surveyed said that most of their landlords were not upping rents on renewal.
In 2018, 13 per cent less properties reached the market, with 80 per cent of those surveyed reporting an undersupply of studios and one-bedroom flats to rent, according to LonRes.
An increase in renewals resulted in fewer new lets agreed in Q4 2018, down 17 per cent on Q4 2017.
LonRes head of research Marcus Dixon comments: “In an uncertain market the response by both buyers and sellers in prime London has been to hunker down and observe rather than participate. This is impacting on both transaction levels and prices.
“However, for those willing to buy, there are opportunities to be had and purchasers are negotiating accordingly.
“The prime rental market continues to benefit as would-be buyers become tenants.
“Despite fewer new lets agreed, owing to an increase in renewals, stock levels are low and competition among prospective tenants is leading to increases in achieved rents in most central London areas.
“Fewer landlords are needing to reduce their asking prices and discounts have fallen back.”