The number of luxury new-build homes sold in London's most exclusive areas fell by 55 per cent in the second quarter of this year, new analysis has shown.
After house prices at the top end of the capital's market fell more than a quarter over the past year, buyers are ditching new-builds in favour of so-called heritage properties which were previously out of their reach, the study of Land Registry data by the London Central Portfolio (LCP) showed.
That pushed sales of flats down by 11 per cent, compared with a 4.1 per cent rise in sales of houses in "trophy" addresses.
“Savvy buyers are recognising the attractions of unique older properties and the added value potential of refurbishment in the current unsettled economic climate," said Naomi Heaton, LCP's chief executive.
"Against this backdrop, new build speculators have pulled back in the face of uncertain or negative returns and the disadvantages of over supplied and commoditised stock.
"A favourite of Chinese investors, capital controls may also be contributing to falling transactions in this sector. LCP have undertaken no purchases for Chinese buyers this year, whilst Knight Frank reported an 80 per cent withdrawal at IFN’s Real Estate Roundtable this month."
House price growth in the capital has been cooling for several months now, with figures published yesterday showing prices fell 5.3 per cent in August, causing average prices in the UK as a whole to fall 1.2 per cent. Kensington and Chelsea, one of the capital's most exclusive boroughs, was the biggest faller, with prices dropping 10.2 per cent.
However, the research by LCP suggested sales of homes valued between £5m and £10m had risen 23 per cent in the second quarter, as buyers took advange of sterling's falling value.
The figures also showed prospective landlords in the capital are being put off: the number of buy-to-let homes sold in the second quarter fell by a third, with their share of purchases falling from 85 per cent to 55 per cent in the last 12 months.
Meanwhile, the average price of a buy-to-let home in the capital fell 12 per cent to £816,000.
Read more: Nationwide scales back buy-to-let mortgages