The property consultancy said on Wednesday that while banker bonuses were a key factor behind rocketing London house prices in 2006-7, their importance has been overtaken by overseas investors and buyers from the hedge fund and private office-populated West End district.

"Until that point, there had been a strong link between house price movements in the capital and bonus payments, but that link is now broken and the market's dependency on City bonuses is much reduced," Savills said on Wednesday.

Buyers from the West End financial district are expected to spend 1.5 billion pounds on London houses priced over 500,000 pounds this year, while City bankers are predicted to spend just over 1 billion pounds in bonus money.

Savills said it expects international investors to retain their position as London's biggest buyers of prime housing in 2012 with a predicted spend of 4 billion pounds, as many continue to favour London for its safe haven status.

"We are seeing early signs that international wealth can be replaced by new equity, particularly from the private offices and hedge funds - the West End cash generators," Savills' Head of Residential Research, Yolande Barnes, said.

Headhunters and bankers are predicting a significant proportion of bank employees will receive no bonus this year, while bonus payouts may be cut by at least 30 percent for those who get them.

The slashed payouts come as falling profits, a gloomy outlook for the industry and political pressure push bank bosses to break away from a culture in which most staff expect a bonus every year and base their personal budget around it.

On Sunday, Royal Bank of Scotland (RBS.L) chief executive Stephen Hester waived a bonus worth almost a billion pounds on Sunday after the handout angered Britons bearing the brunt of government budget cuts.

(Reporting by Brenda Goh, Editing by Mark Potter)

• A Permanent Economic Emergency