Sales of multi-million pound London homes have fallen by 40 per cent over the past three months and the drought in housing activity looks set to continue as Nationwide reported today consumer confidence at a four year low.

Savills, one of the country's largest property agents, said today that its volume of business selling flats and houses worth between £1 million and £5 million in prime central London suffered "a sharp fall in transaction volumes" over the first quarter.

Jeremy Helsby, the chief executive of Savills, said: "There is a lack of sellers and buyers lack confidence — it is all about sentiment. There is jobs uncertainty in the City. At the moment we are actually seeing volumes down 30 per cent to 40 per cent down — the trend has got worse over the last two months."

Mr Helsby added that he was "definitely looking" at trimming his workforce of part-time residential homes sales force within the new homes division. Job losses would probably total "a few dozen maximum", Mr Helsby said, out of a total residential sales team of over 500 permanent staff.

Residential property transactions contributed to about 20 per cent of Savills's group profits last year and within residential, new homes business accounted for 6 per cent of profits.

Asked if Savills was looking at culling any full time residential agents, Mr Helsby said: "It is too early days. It would be dangerous to have a knee jerk reaction. On the residential side there are a lot of part-time staff. There is trimming that can be done before making them [full-timers] redundant."

The decline in volumes came as the firm saw a 1.5 per cent decline in average house prices in prime central London between January and March and followed a 2 per cent decline in the final quarter of 2007.

Mr Helsby said however that in the commercial property market prices of London City offices — by far the largest market for UK commercial property — were close to bottoming out after 10 months of sharp price falls.

"But there is still further pain to be seen for secondary stock in the regions especially secondary retail property," Mr Helsby added. "Prices could fall 5 per cent to 10 per cent — it is difficult to see. In the second half of this year we expect to see some forced sellers [in the regions]. Some of those groups which are highly leveraged must be coming under pressure."

Separate figures out today from Knight Frank, the property agent which vies with Savills in the prime London housing market, revealed that sellers achieved an average 96 per cent of their asking price in April. At this time last year, sealed bidding and high demand meant they were achieving 102 per cent.

The outlook for the housing market was darkened today as Nationwide said that its monthly measure of consumer confidence in April fell to its lowest level since the survey began in May 2004.

Nationwide's index fell by seven points to 70, a fall of 22 per cent from April last year.

Delivering a stark message to the Bank of England ahead of tomorrow's decision on interest rates, the Nationwide survey showed that less than one in five consumers believe the economy is in good shape.

Almost half of all consumers surveyed believe the economy will worsen further in six months time, twice as many people showing pessimism than a year ago.

That pessimism has spread to fears about job prospects and house prices generally which consumers expect will fall by 1.7 per cent between May and the end of October.

Finonnuala Earley, Nationwide's chief economist, said: "The cut in interest rates in April did little to lift consumer spirits. Food and fuel prices remain high and, with house prices no longer rising, it is unlikely that consumer confidence will pick up very quickly. We may have to accept that confidence levels could well worsen before they get better. This is especially true as inflationary pressures mean the MPC [Monetary Policy Committee] will probably prefer to cut rates at a more gradual pace than many would prefer."

The Bank's base rate was cut last month to 5 per cent, the third quarter point cut in rates since winter.

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