Research carried out by Stirling Ackroyd into house prices before and after the reforms found the top 25% of the capital’s properties have had their prices slashed by -5.4% since Q2 2015, when the average was £1,227,000.
House prices fell further by -1.5% on the previous quarter in Q2 2016, following the introduction of the 3% stamp duty surcharge on second homes in April 2016.
The estate agent said this was evidence that, rather than Brexit, the top end of the housing market has been negatively impacted by the stamp duty tax and therefore it must be reconsidered.
Research also found house prices for the rest of the market increased by 7.8% between Q2 2015 and Q2 2016 – the period when the first set of stamp duty reforms were introduced.
It took the average house price for the bottom 75% of properties from £441,000 to £475,500 due to a lack of mid-market supply.
Nick Davies, head of residential development at Stirling Ackroyd, said: “The reality is that without movement at the top, the middle and lower end of the chain are being blighted by a shortage of available properties, leading to intense competition and spiraling prices.
“Higher income families are holding on to their homes rather than moving up, while buy-to-let investors have all but disappeared, which in time will have a similar effect on the rental market.”
Stirling Ackroyd’s message to the government supports additional research carried out by Yorkshire Building Society, which found 60% of first-time buyers would be more likely buy a home if they did not have to pay the stamp duty tax at all.
The building society urged the Chancellor, ahead of the Autumn Statement, to consider changing the stamp duty a seller’s tax rather than a buyer’s tax to reduce the initial costs of buying a property.
However, Davies said there had been renewed interest in foreign buyers since the fall in the value of the pound but he warned the industry not to become complacent as the market has remained sluggish since the Brexit vote.
He concluded the Chancellor should take the opportunity to rethink the stamp duty surcharge and the cost of stamp duty across the board as “all it serves is a disincentive to moving home.”