Property sales in prime central London property sales have been hit by stamp duty reforms with no sign of an immediate recovery.
In December, Chancellor George Osborne's increased stamp duty for properties worth more than £1.1 million, disproportionately hitting buyers in property hotspots across the capital.
This has led to "subdued activity" according to a new report by Knight Frank, while strong price growth has also hit sentiment.
Annual growth was flat at 2%, down from 7.9% in July 2014
London accounted for 13% of transactions across England & Wales in the first quarter of this year, but contributed 46.9% of stamp duty revenue.
London properties worth £1 million or more accounted for 1% of sales but 25.8% of stamp duty revenue in the first quarter of 2015.
Tom Bill, Knight Frank's head of London residential research, said subdued activity in prime central London is likely to continue until the autumn as buyers and sellers digest recent tax changes.
“Following a general election and a Budget that contained a degree of focus on the prime London property market, more discretionary buyers are waiting to see how readily recent policy changes will be absorbed.
“While there seems to be some short-term hesitation around recent alterations to non-dom legislation, it is December’s rise in stamp duty which appears to have had the single biggest dampening effect on demand as buyers digest the reforms.
“Despite the strong underlying economy, the number of tax changes, which have a particularly strong impact on London, means the market is undergoing a period of readjustment.”