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The total value of homes sold in London’s most expensive postcodes dropped almost 25 per cent this year, as a series of factors, from stamp duty changes to low oil prices, held back what had been a fast-rising market.

The combined value of the houses and flats sold in prime central London areas such as Belgravia and Chelsea came to slightly less than £3bn in 2015, 24.5 per cent less than the 2014 total, according to LonRes, a data provider.

That reflected both a much slower rate of transactions and a slight weakening in prices: average prices were down 1.4 per cent in the wealthy central districts.

Anthony Payne, director at LonRes, said that an overhaul of stamp duty at the end of 2014 — which increased the tax payable on properties costing more than £938,000 — had played a part.

“But a series of other factors have been at work. The top end of the market in the last few years has been reliant on foreigners, but a series of things are affecting them that are out of the government’s control — the strength of the pound, the weakness of the oil prices, the state of Chinese markets,” he said.

“Those people who were awash with cash don’t have as much cash to spend.”

The government has also announced changes to the rules on “non-doms”, residents whose permanent home is outside Britain, subjecting more people to UK taxation on their overseas income and gains.

Prices per square foot in prime central London dropped slightly from £1,839 in 2014 to £1,813 in 2015, while in the area known as prime London — which also includes areas such as Marylebone and Camden — prices were almost static, moving from £1,286 to £1,287 a square foot.

Fewer homes were sold in both areas, with prime central London home sales at more than £5m dropping by 30.5 per cent.

In the central districts, some 37.9 per cent of homes had their prices reduced before they were sold, up from 28.4 per cent the previous year.

Buyers were able to secure bigger discounts: homes sold at an average of 95.5 per cent of the asking price in 2014, but that fell to 93.2 per cent in 2015. This partly reflects the stamp duty changes — in some cases, sellers are being asked by buyers to absorb the extra tax, said Mr Payne.

“There is a pause in the market while people catch their breath, while vendors start to understand that property is not where it was two years ago and reconsider the values or choose not to sell, and buyers just sit tight,” he said, adding that the result would probably be a drop in prices.

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