The prime central London market is showing further signs of decline, says Strutt & Parker.

Its data for the third quarter of 2014 shows that both prices and transactions have slipped year on year.

The overall value of properties transacted by the firm is down 21.1%. Properties sub-£2m saw a decrease of 20.8% while £2m-£5m homes went down by 27.1%. £5m-plus homes performed slightly better, but still saw a decline of 15.2%.

A similar pattern emerged in terms of volume sales, which were down 26.8% overall, with all price bands seeing a reduction in the number of transactions.

The firm said that when looking back over the past five years, these statistics are not so concerning as the volume of transactions is actually up by 3.1% compared to the rolling five-year quarterly average.

Over the past five years, the £2m-£5m price bracket has seen a 20.9% increase, and the £5m-plus bracket is up by 19.6%. In contrast, the sub-£2m price bracket is marginally down by 2%.

Stephanie McMahon, head of research at Strutt & Parker, said: “Whilst total values transacted in central London are markedly down on this time last year, we must have a sense of perspective and accept that 2013 was an exceptional year.

“It is really not surprising that prices are stabilising after the dramatic price increases we saw over the past 12 months.

“Sales volumes are also showing a slowdown and two quarters of data do suggest a trend of decline. This is as we predicted. We have seen these conditions before in the run-up to a General Election when speculation mounts.

“It is a recognisable pattern and we do not believe it spells doom for the property market in the long term.”

Lulu Egerton, partner at Strutt & Parker in Chelsea, said: “There is no doubt that PCL property is in the midst of a price correction.

“Properties which are priced competitively and realistically are still selling and we are achieving good figures. After a spectacular year in 2013, asking prices had become inflated and they are now in a period of correction where prices are being adjusted down by around 5% to 10% as buyers become far more price sensitive.”

Strutt & Parker defines PCL as Knightsbridge, Belgravia, Chelsea, South Kensington, Fulham, West Chelsea, Kensington and Notting Hill.