Britain's wealthy have finally been bitten by the credit crunch according to Savills, the UK property agency, which today revealed that deals involving country piles worth up to £5 million are falling in both volume and value.

The group also said it was cutting jobs across its busines but denied reports that hundreds of estate agents, from its 3,000-strong staff, would leave.

Over the six months to June 30, Savills reported that transactions of prime residential properties, worth between £1 million and £5 million, in central London had fallen by 45 per cent and prices had declined by 7 per cent.

It added: "Prime country property was initially less affected than London but is now following suit."

Savills said that while buyers in its lower price band, which it defines as properties under £1 million, "have been particularly affected by mortgage restrictions imposed by the banks", properties valued at between £5 million and £10 million appear to be weathering the storm.

It said: "The very top end of the prime residential markets, while not immune to the slow down, have nevertheless proved much more resilient."

Jeremy Helsby, chief executive of the surveying firm, said he did not expect to see a marked recovery in sales in the second half of the year. "We have positioned our business to take account of lower volumes and we can still make a profit if sales remain at this level," he said.

He added that there were some early signs that mortgage availability was improving. "We are starting to see some lending from building societies and from private banks, to buyers who have substantial deposits," Mr Helsby said.

Savills is predicting that house prices will fall by 25 per cent over this year and next but it expects the national picture to recover strongly by 2012, when it predicts that property prices will again reach the peak seen in 2007.

The chief executive also criticised the Government for its indecision on stamp duty. "Dithering about doesn't help anybody. Either we want a proposal or we want nothing. This situation is just abother reason for people not to make a decision," Mr Helsby said.

In Savills transactional business, which covers commercial and residential property, revenue slumped by 22 per cent while profits plunged by 88 per cent to £2.5 million.

Overall, for the six months, Savills turnover fell from £284.2 million to £278.1 million while pre-tax profit edged up one per cent to £33.4 million.

However, underlying profit, which does not include profits from disposals, share based payments, amortisation and goodwill impairment, fell from £32.5 million from £19.2 million over the first half of the year.

Despite the fall in transactional business, Savills reported strong growth in its consultancy and property management divisions. In particular, property management performed well, with profit up 58 per cent and revenues up 21 per cent.

Savills said it would save between £20 and £25 million this year after cutting costs, including making some of its staff redundant. "We are still recruiting in many parts of the business. We have opened new offices in Germany and China and we have hired a corporate finance team in London," Mr Helsby said.

The five-strong corporate finance team, poached from rival DTZ, represents a move into a new area for the surveying firm. One of the areas it will concentrate on in the current climate is debt restructuring.

In financial services, however, the tightening mortgage market meant that profits slumped by 59 per cent to just £700,000 while revenues fell 22 per cent to £10.4 million.

Savills will maintain the interim dividend at 6p.

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