Sales of top-end new-build homes in central London fell more than 40 per cent last year, as prices began to slide.
New analysis of Land Registry data found sales of newly completed homes in so-called prime central London were 41.4 per cent lower by the end of 2016 than they were the year before.
The analysis, by the London Central Portfolio, showed average prices for luxury new-builds fell 8.7 per cent, to £1.9m, with the top end of the market worst hit: sales of new homes worth more than £5m fell 57 per cent.
It was a slightly different story across the rest of the sector. Factoring in older properties as well as new-builds, sales in prime central London fell 29 per cent. However, prices rose 3.75 per cent.
Around the rest of inner London, sales of new-build homes fell 3.9 per cent, although in the final quarter alone sales fell 29 per cent. The number of sales worth more than £5m fell more than 50 per cent, while the sales worth less than £1m, just under 90 per cent of the sector, fell 34.6 per cent.
It's not the first analysis showing central London house prices have been hit. Last month figures by LSL showed house price growth in the capital had fallen to 1.5. per cent, while analysis by Knight Frank has shown prices in exclusive areas such as Kensington and Chelsea have fallen as much as 13 per cent. Many analysts have attributed punishing new stamp duty rules, introduced last April, which target buy to let homes and homes at the top of the market.
“The struggling performance of the new build market in Inner London will certainly be beginning to worry developers," said Naomi Heaton, chief executive of LCP.
"It has already been reported that Battersea Power Station has reached a ‘critical stage’ and has written down its projected investment returns from 20 per cent to 8.23 per cent.
"As is now being seen, in areas such as Battersea-Nine Elms, there is a saturation of over-priced, over-supplied ‘commodity style’ property which leads to a softening market, particularly during times of instability.”