The central London housing market has probably already burst, one agent said yesterday.

WA Ellis said that transaction levels across the prime central London market were down by 14% in the third quarter of this year compared with the same time last year.

However, while it said that the rate of change was an improvement from the first quarter when transactions were falling at an annual rate of 27%, the bubble may have already popped.

The firm said that over one third of properties in prime central London have had price reductions.

WA Ellis, now part of JLL (formerly Jones Lang LeSalle) and which operates out of pricey Knightbridge, has spoken out after banks have called the top of the London market, with warnings that London trends ripple out.

WA Ellis director Richard Barber said: “It would appear that the bubble may already have burst in prime central London but the effect is not as decimating as reports from UBS and Deutsche bank suggest.

“The government’s intervention in December 2014 by raising SDLT has indeed cooled the very top of the prime central London market and the continuous upward spiral has been halted: 36% of all properties currently on the market across PCL are now being marketed at a lower price than they were originally listed at, with the average reduction in price being 8.5% of the original asking price.

“Continuous capital growth in any market is an unrealistic expectation. However, we believe that the correction has already happened and the above statistics bear this out.  This is supported by the minimal growth that JLL are predicting over the next two years with much of this being accounted for by the new build sector.

Another London agent Douglas & Gordon has said that stock levels are down year on year, while demand is at its highest for 12 months.

The firm does not expect a rapid pick-up in inventory, despite a growth in valuations activity, and last night director Ed Mead described its pipeline as “bad but not disastrous”.

Mead said that the slack on sales is not likely to be taken up until next spring, and while the ‘under offer’ pipeline is good, it is also very long.

He said: “The issue is the absurd length of time to get from agreed to exchange – well over 12 weeks, and this will extend into the New Year.

“Rentals are at their highest revenues ever, but the slack on sales will not be taken up until the spring.”

He said pipeline is “about where we’d expect in this market, still bad but not disastrous” given paucity of stock and elevated demand.

Mead stressed that Douglas & Gordon is “lucky” to have offices in London that are outside the prime central market.

His firm’s sales director George Franks said: “The sales market is treading water, as it has done for some time.

“Valuations are up 20% although buyer sentiment indicates that a new tranche of stock is unlikely to be released until spring 2016.”

“Sales agreed are soaring when we would expect them to be falling, further signalling an upbeat prognosis for the market returning to health in both value and volume towards the end of Q1 next year.

“As we approach the next Autumn Statement, Stamp Duty receipts are forecast to be half of what they were in the last figures which will not only damage the Treasury’s coffers but might well trigger a rethink of the swingeing SDLT reforms implemented almost a year ago.”

Winkworth also expressed concerns.

It said it expected market conditions to be similar to this year’s, with central London continuing to be affected by high Stamp Duty costs and buyers taking this into account when considering what to offer.

However, said Winkworth: “We believe that this added burden will be progressively absorbed over the source of 2016 – albeit with fewer transactions – with the changes having little impact from 2017 onwards.”