Property prices in central London could soar even higher over the next few months as overseas investors rush through the sale of luxury homes to beat the proposed new capital gains tax charge.
Chancellor George Osborne is said to be considering plans to impose capital gains tax on wealthy foreigners when they sell property in the UK, in his forthcoming Autumn Statement.
UK residents already pay CGT, at between 18% and 28%, on the proceeds of second homes sales, but foreign owners don't have to pay CGT.
Property advisers Benthorp expects a flurry of completions in the prime areas of Chelsea, Kensington, Knightsbridge, Belgravia and Mayfair that will drive prices up by 5% in the first quarter of next year to £3.8 million.
This is an increase of 123% than the market low of 2009, when sales totalled just £1.7 million.
Harry Clifton, managing director of Benthorp, told The Daily Telegraph: “We have seen some overseas-based long-term UK real-estate investors markedly speed up their decision-making for purchasing over the past two weeks, in anticipation of extra tax entry and exit costs that will simply drive up overall entry prices.”
Mr Clifton said that prime central London remains a secure long-term base for investment, but clients are concerned about tax-induced price inflation.
City bonuses fuelled the prime property price rise from 2002 to 2007, but demand fell when the banking crisis hit and bonuses almost halved in 2009.
Since the financial crisis, prices have been driven up by demand from foreign investors seeking a safe haven investment, and taking advantage of the falling value of the pound.
More than 75% of property in Mayfair is owned by international buyers, an area popular with US hedge fund owners.
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