Already this year 11 flats have sold for more than £1m each, compared with 22 in the whole of last year But even so, the business is erratic. Many agents feel the cooling off has much to do with the economic situation in their own countries. They competed for almost every smart new development which came up for sale. Suddenly they have disappeared.Almost the only hot spot of activity is Knightsbridge, where overseas buyers are looking for homes rather than investments.

"People are very aware of the problems of servicing a high mortgage with a pegged income." Prices were "possibly holding to within a spit of last year".In central London, prices were pushed up by overseas investors, particularly those from Hong Kong and the Far East. Diana Sketchley runs the country house department of Allen and Harris, which covers that part of the country. She said: "We had a quick flurry in January and it has just fallen away completely. Normally at this time of the year I would have negotiators out four days out of five on valuations.

It simply isn't happening."There is plenty of interest from potential buyers living in rented accommodation, but because they have hung out so long they are very hard-nosed about what they will buy and what they will pay for it." Allen and Harris opened its Newbury office over Easter last year because of the strength of the market. "We are seriously considering not opening this year," said Mrs Sketchley.Most of the demand in these areas comes from families moving out of London looking for large period houses There is almost nothing to show them. Yet despite this imbalance in supply and demand, prices are not rising. Mrs Sketchley feels this is due to a lack of confidence among buyers about their financial future "Salaries are not rising Interest rates are creeping up," she said. There are plenty of keen buyers around, but they refuse to chase prices up in order to get the right house.