Sales in the Prime Central London market rose in the month to September, but the overall “subdued” mood of 2015 is continuing, as higher stamp duty means buyers have become more reserved.

That is the message coming out of Knight Frank’s latest sales index for the region.

Annual price growth overall declined to 1.3%, its lowest level since October 2009, but price declines were in excess of -3% in some areas to the west of the central area.

The figures also reveal that new prospective buyers declined by -34%, but actual viewings fell by only 4%.

Interestingly, an east/west divide seems to have appeared around Hyde Park, with prices rising in areas such as Islington, the City, Marylebone and Mayfair to the east, but falling in Notting Hill, South Kensington and Knightsbridge to the west.

The report said the divide was possibly due to a greater concentration of larger houses to the west which were now subject to higher stamp duty.

Tom Bill, Knight Frank’s head of London residential research, said: “Underlying demand remains strong but buyers have become more circumspect and stringent in their requirements due to the stamp duty increase.

“This heightened price sensitivity among buyers has resulted in a flight to quality, meaning demand is particularly strong for properties in the best condition and on a prime floor, street or square.

“So, while the anticipated gear change materialised as summer moved into autumn, there was no sense the market is entering full-blown recovery mode after what has been a subdued 2015.”

Richard Barber, director at W.A. Ellis, said: “Transaction levels have been down throughout the spring and summer months and, whilst some of this reduction may have been due to election jitters, it is now apparent that the increase in stamp duty is the main driver behind this trend.

“Whilst the government may not wish to admit that HMRC’s stamp duty revenue has diminished by £1.5 billion in the first six months of 2015, compared with the previous six months, it is unlikely that George Osborne will reduce the new levy at this stage in the political cycle.

“With lower transaction levels across Prime Central London (PCL), it is clear that quality is a priority for buyers, notably, the most recent transactions within our PCL postcodes have all been properties of the highest quality with exceptional attributes.”

In lettings, Knight Frank said annual rental growth declined to 2.4% in September – the lowest level since last September.

The slowdown was the result of a knock-on effect of the state of the Chinese economy, said Knight Frank, with companies more hesitant about recruiting and spending relocation budgets for senior executives.

The result of this was that the number of tenancies agreed in the three months to August fell by -5.9% compared to the previous year and the number of viewings declined by -10.2%.

Knight Frank expects the trend to continue in the short term.

However, the report said the trend was less marked in both the lower and higher price brackets, with demand among young professionals remaining strong, while demand at the ‘super prime’ level of £5,000 per week and above has “been buoyed by the fact tenants have moved across from the sales market due to the stamp duty increase”.