Upmarket property group Savills today said the economic slowdown had started to impact on London's luxury house market.

Sweeping cuts in City bonuses and uncertainty amid the credit crunch have seen "prime" property prices fall 1.5% in the first three months of the year, according to Savills' latest data.

Today's news follows a 2% fall in prices in the final three months of 2007 as the effects of the credit crunch spread to the once resilient high-end property market.

Savills said it had seen a "sharp" fall in London property transactions, as well as declines in property prices across the capital and elsewhere in the country.

Regional luxury property prices fell by a less dramatic 0.5%, but Savills said prime property markets across the UK were under pressure.

Top-end house prices had been holding up well despite the tightening in credit markets, which has hit values in the wider residential and commercial property sectors. But buyer demand for luxury London properties is being hit as City workers lose their jobs due to hefty losses in the embattled banking sector.