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The richest people in the capital went on a buying frenzy just before April to snap up second homes and buy-to-let properties, says London's largest estate agent Foxtons.
The group, which published a trading update for the quarter ending March 31, said that total group revenue for the quarter was at £38.4 million, up 16.2% compared with the first quarter last year.
"A significant increase in transactions completing before the introduction in April of the 3% stamp duty surcharge on buy-to-let investments and second homes," helped boost the numbers, according to Foxtons.
Stamp duty is a tax placed on buyers when they purchase a property in the UK. It is payable on completion of the property.
So this works out to an extra £93,750 if you're buying a property at £1.5 million, according to the government's stamp duty tax calculator. However, if you're buying a property for £5 million, you'll be forking out £513,750 just in stamp duty fees.
Secondly, if you own more than one property, a 3% stamp duty is applied. The new fee came into force in April and is applicable to buy-to-let investors and those who are buying a second home. This 3% fee is on top of the extra cost of a new purchase in April.
So people rushed out to buy before being slapped with the extra 3% tax. The average house price in London is over £500,000, according to the ONS, so those buying are likely to be relatively wealthy.
HMRC
And it is for this reason Foxtons warned "with a large number of completions brought forward, the sales pipeline for the second quarter is therefore lower than prior year."
This follows directly in line with other estate agents' predictions.
This week, Countrywide, the UK's largest estate agency group, warned of a coming chill in the property market.
In a trading update on Tuesday, the group, which owns brands like Bairstow Eves and Hamptons International, says it has had a bumper start to the year as buyers rushed to snap up buy-to-let properties and second homes ahead of the new 3% stamp duty surcharge that came into effect on 1 April. House exchanges in the first quarter were up 30% on last year.
But Countrywide warned: "We expect the housing market to slow in the second quarter post the surge in buy-to-let activity in the first quarter and reflecting challenges from the political and economic uncertainty in the lead up to the EU referendum in June."