Savills has given warning of sharp price falls for multi-million-pound Central London flats and houses this year and next, reversing a forecast made last autumn.

Fears that City banking bonuses for the coming year will be a fraction of the last £7.4bn annual payout is expected to put a further chill on demand for central London housing in the £1m to £5m bracket.

House prices in this price bracket have already fallen on average 1.5% during the first three months of this year.

This morning's Tmes reports that those price falls come after a decline of 2% during the last three months of 2007, according to Savills.

The property agency expects prices to continue falling quarter-on-quarter for the whole of 2008, ending down 4% for the year.