Industry sources have described it as the fastest rate of decline since the early 1990s and took annual growth to 12.8% compared to 17.3% in April.

Bricks and mortar trading at under £1 million were the worst affected, with monthly price falls of -2.3%, while the £1 million to £2.5 million bracket fared only marginally better with a decline of -2.2%.

Unsurprisingly, it was the very pinnacle of the prime market that suffered the least, as wealthy internationals who don't need to secure UK mortgages kept the £10 million plus market stable.

Knight Frank said it was mostly concerned about the dwindling level of transactions: sales volumes were down some 50% compared to May of last year, indicating that the credit crunch has finally caught up with the top end of the market.

Despite registered buyers only falling by 20% compared to this bigger fall in activity, the main concern is that without a pick-up in lending, the Capital's prime property market could experience further losses.

Liam Bailey, Head of Residential Research at Knight Frank, comments: “Purchasers are struggling to access finance at the current time, and combined with weaker sentiment this has led to a slump in sales.

“Overall, our view is that prices for prime central London property will slide further in 2008. “Attempting to provide detailed forecasts is becoming increasingly difficult; however we believe that a fall of 5% is probably a best-case scenario for central London this year.

“With no improvement in the mortgage market this decline could easily be well into double figures.”

Last month, market reports indicated that even the most exclusive London properties were beginning to feel the effects of the slow down in the housing market.

Figures from Kinght Frank show that the monthly change of 0.1% was a repeat of March’s price growth and took the three-month average to just 0.8%, the lowest since February 2005.

The company said the slowdown was also reflected in the annual rate of growth, which stood at 17.3%, not even half of last August's market high of 37.9%. However, the priciest bricks and mortar are still faring well, according to the report, with the super prime £10 million plus properties recording 1% monthly rise in April.

The figures further revealed that the £2.5 million - £5 million bracket also managed to secure above average growth of 0.3%.