Increased tax levies on properties within the city limits of London are having a stifling effect on sales of homes valued in excess of £2m. Experts in and around the UK housing market are growing concerned that a lasting period of this stagnation could be increasingly unhealthy for the market in general. The latest data from London property specialist Douglas & Gordon indicate a massive slowdown is taking place in the sales of top end homes.

Concerns that the effect could spread to other parts of the housing market are now being discussed.

Ed Mead of D & G commented on the possible lasting impact this stagnation could render, saying: "If you choke off the top end of the top end, that has an effect all the way down."

Mead added: "It's like a Chinese lantern or an accordion. If you cut the top of it, the whole thing starts collapsing. And people don't understand that about London."

The new taxation, imposed in the last month of 2014, is part of George Osborne’s overhaul of the tax system which includes housing market purchases. A 10% tax is now part of a property purchase of over £925,000 and a 12% tax on purchases over £1.5m.

Buyers and sellers are now at odds with each other when negotiation time comes. Sellers are asking for lower prices to compensate for additional tax costs.

Mead continued: "That has just caused a crash in volumes because very few people are moving. That is going to have an effect all the way down. People aren't moving into London from places like Battersea so they're not selling their places there. People who would normally buy there can't get in. It's having a real constipating effect that means that for those people who do want to buy, they've probably got to pay a bit more, or they've got to find someone who is desperate to sell. It's an increasingly unhealthy situation."