The number of applicants in prime central London has dropped by 25% in a year, with viewings down 10%, Knight Frank has reported.

It says that 11 out of its 13 offices in the area reported flat house prices in July and that there is a “growing mood of caution”. Monthly house price growth was just 0.3%.

The firm says sellers have realised that demand is cooling and lowered asking prices.

Conversely, the firm says that rents are climbing for the first time in over two years and that the number of prime central London tenancies signed in July by Knight Frank was the highest ever.

Rental viewings are up by almost 26% on a year ago.