Hamptons International said that whilst house prices in Greater London are set to increase on average by 15.5% this year, it predicts that there will only be a further 3% average increase in prices across that market in 2015.
Across the whole of England and Wales, house prices are expected to rise on average 8.5% this year and 5.5% in 2015, Hamptons International said.
Fionnuala Earley, director of residential research at Hamptons International, said that the forecasted reduction in growth could be attributed to a "change in sentiment" that has been "brought about by increasingly strong messages from the Bank of England culminating in the implementation of more stringent affordability regulations (including the introduction of the Mortgage Market Review)".
Anticipation of a rise in interest rates will also cause growth in the housing market to slow, she said.
"The Bank of England has been trailing for some time the fact that it will steadily increase interest rates in the coming months," property law expert Dev Desai of Pinsent Masons, the law firm behind Out-Law.com, said. "Those statements can themselves act to cool the market as prospective buyers look to reassess whether they can afford to take on mortgages."
"In addition, constraints on lenders, driven by the Bank of England's fear of the impact another crash in the property market could have on the UK's economy, will also act to dampen activity in the London market," he said. "The effect of the measures could be that sellers have to revise down their expectations of the price they will receive for their property amidst slowing demand on the buyer-side of the market."
In June the Bank of England called on the financial services regulators in the UK to require large banks to restrict to 15% the proportion of residential mortgages they approve where the value of the loan is more than 4.5 times the value of borrowers' annual income.
A separate initiative, the Mortgage Market Review that was introduced by the FCA in April, prevents firms from lending to borrowers without the means to repay loans particularly if interest rates were to rise.
Desai said that growing confidence among property developers may also be having an impact on the London housing market.
"We have noticed there is greater confidence among developers and this is leading to a number of new house building schemes being planned. Moreover, the Legacy Communities Scheme plans to build five new residential neighbourhoods – Cobham Manor, East Wick, Sweetwater, Marshgate Wharf and Pudding Mill – in and around the Olympic Park site will significantly increase the supply of housing in the area," Desai said. "The upturn in development activity and availability of new housing stock, together with an increasing trend of people buying houses 'off plan', means that demand for existing residential property may cool."
"Additional factors driving down growth estimates might also include geo-political developments. The imposition of sanctions on Russia may indirectly affect appetite from Russians looking to invest at the top end of the London property market. That said, we are continuing to see strong demand from buyers from the Commonwealth of Independent States (CIS) and the Middle East in high end property in central London," he said.