House prices in London’s most expensive areas have begun to fall for the first time since the financial crisis, as tax rises curb demand and trigger fears that the capital’s luxury market has peaked.

Over the past three years, George Osborne, the chancellor, has implemented measures cracking down on foreign property owners, imposing new taxes and raising existing ones. This culminated last December with a radical reform of stamp duty that estate agents complain has “clobbered” wealthy home buyers.

The market was widely expected to bounce back after the Conservative general election victory killed off any chance that owners of expensive homes would face the Labour party’s proposed “mansion tax”. But this renewed boom has not materialised, and estate agents are warning sellers to lower their price expectations in the face of caution from prospective buyers.

The price of top-end London homes fell in the second quarter of 2015 for the first time since 2009, according to exclusive research for the Financial Times by the data provider LonRes. Properties in “prime” central London markets fell 0.9 per cent in the year to end-June, LonRes found — a rapid deceleration from a year earlier, when prices jumped 15 per cent.

Notting Hill, Kensington and Knightsbridge have been worst-hit, according to research by the estate agent Knight Frank. The slowdown has also affected deal volumes: fewer homes are changing hands. The number of transactions in London’s most expensive areas has dropped nearly a quarter year on year, according to LonRes.

Anthony Payne, LonRes director, said London’s luxury housing market had been “growing far too quickly”, and called the slowdown “good news”.

“A boom-and-bust scenario is the last thing the housing market needs,” he said. “What we’re now seeing is the impact of the chancellor’s calming measures beginning to take effect.”

Lucian Cook, director of residential research at property advisers Savills, said the Autumn Statement was “clearly a turning point”.

“The increase in stamp duty clearly made what was a fully priced market also look fully taxed.”

Someone buying a £6m house now faces transaction costs of £750,000, according to Charlie Ellingworth, a partner at the buying agent Property Vision.

Before the election, “everyone thought that a mansion tax was the thing that was holding the market back”, but since then it has become clear that “the real problem is stamp duty”, Mr Ellingworth added.

“Obviously, at the lower end of the market, most people are better off [because of the stamp duty reform], but at the top end it is costing buyers serious sums of money and people are gulping at it.”

Meanwhile, he pointed out, “sellers have completely unrealistic expectations”.

Henry Pryor, an agent who acts for wealthy buyers, said that “the balance of power has shifted from sellers to buyers” and, as a result, the market for high-value homes was “re-setting itself” to take all tax changes into account.

The strength of sterling and tighter mortgage lending rules introduced by the government last spring had also contributed to the slowdown, said Mr Payne.

Charles McDowell, an independent buying agent, said that the situation “could be worse”. “If Ed Miliband had got in, the market would probably have ground to a halt,” he said. “I’d be living in Palm Beach right now.”

  Middle-class enclaves prosper

Unlike central London’s most expensive districts, house prices in outlying parts of the capital are thriving.

Areas farther from the centre are doing best, figures from the estate agent Douglas and Gordon show. House prices in these areas have risen 1.5 per cent since the stamp duty reforms, while prices in the central London core dropped 0.7 per cent over that period.

The research pinpointed particular hotspots in south London around Clapham Common, Balham and to the east of Wimbledon Common in Southfields and Earlsfield.

Ed Mead, a director of Douglas and Gordon, said domestic buyers had been pushed out to these areas as a result of the boom in the centre of the capital.

“Most English people can’t afford to live in central London any more and some of these outlying areas are becoming really serious bastions of the upper middle class,” he said. “These are the only places they can afford that are reasonably within striking distance of where their parents’ generation thought were acceptable places to live.”

Separate research by Knight Frank has identified Wimbledon, Richmond and Hampstead as all seeing strong price growth in the year to June.

By contrast, areas closer to London’s priciest areas are seeing price growth stutter, Mr Mead said. “These areas’ values shot up so quickly that it made people nervous.”

Aspiring domestic buyers who need to borrow are being particularly badly hit by tighter mortgage lending rules, introduced by the government last year, Mr Mead added. They are finding it harder to compete with cash-rich investors — another factor pushing them into cheaper markets.