LONDON's wealthiest home owners are having to drop prices by more than 10 per cent to attract buyers, a top estate agent has warned, in another sign the capital's market is collapsing.
Asking prices for homes in exclusive areas of London plunged last month, as sellers raced to secure deals before a new property tax took effect in April, said Knight Frank.
It's thought the three per cent stamp duty surcharge on landlords and investors could dampen demand in the coming months, pushing vendors to sell at higher prices while they still can.
Values for 'prime' central London homes increased by just 0.8 per cent in the year to March, according to Knight Frank.
The agent said this is the lowest figure since October 2009 - when the market collapsed following the worldwide financial crisis.
Exclusive Knightsbridge saw prices fall by 6.8 per cent in the year to March, while values in Chelsea dropped by 2.5 per cent, found the agent.
These were the areas that saw some of the largest price growth after the financial crisis, providing a knock-on affect on values across the capital.
Tom Bill, head of London residential research at Knight Frank, said: "There is a growing recognition on the part of vendors that the prime central London property market is no longer on the upwards trajectory it was in the years following the financial crisis."
The average price in London is more than & pound; 500000 - over double the national average.
But amid fewer foreign buyers and lack of affordability for British purchasers more experts are predicting big price falls.
More surveyors in London now think house prices will drop over the coming three months, the Royal Institute of Chartered Surveyors recently reported.
Earlier this year investment bank Morgan Stanley predicted prices for prime flats could crash by as much as 20 per cent.