Sales of top-end homes continued on a downward spiral after the Government introduced a stamp duty hike on properties worth more than £2 million, Land Registry figures showed today.
The number of homes which sold for more than £2 million saw a 40% year-on-year fall in April to 114, following an equally dramatic 40% annual drop recorded in March during last month's study.
A 7% stamp duty rate was imposed on homes in this bracket from March 22, causing estate agents to warn that some sales further down the property chain would also crumble as a result.
Sales of homes worth £1 million to £1.5 million plummeted at an even faster rate, by 47% year-on-year, to 248 in April, the latest month for which the figures are available. Sales of properties worth between £1.5 and £2 million were down by 38% annually, to 106.
The vast majority of the top-end sales took place in London, which has had strong interest from overseas buyers and has been vital in keeping average house prices up.
By comparison, sales of homes within the average house price bracket of £150,001 to £200,000 were down by 25% year-on-year, with 7,685 completed purchases.
Elsewhere, the study showed that house prices rose by 0.1% month-on-month and by 0.9% annually in June in England and Wales to reach £161,777.
But analysts said this upswing was unlikely to last for long as house prices rose far more slowly in the second quarter of this year than in the first.
Ed Stansfield, chief property economist at Capital Economics, said: "Having risen by 0.7% in the first quarter of the year, average house prices rose by just 0.2% in the second quarter.
"The regions reporting the strongest gains in June all experienced similar or larger house price falls over the previous one or two months.
"In other words, the latest sharp rises may be little more than the normal month-by-month volatility in the data."
London saw the biggest year-on-year increase, with a 6.3% rise taking typical prices to £359,476, while Yorkshire and the Humber saw the biggest annual price fall with a dip of 1.9% as well as the biggest monthly fall with a 0.3% drop taking typical prices to £117,908.
Wales saw the biggest month-on-month increase, with a 2.5% rise taking average prices to £118,847.
Home sales generally have increased between January and April 2012, when compared with the previous year, although much of this has been due to the ending of a first-time buyer stamp duty concession in March, which lenders and estate agents said caused sales to bunch up.
There were 47,242 property transactions between January and April this year, compared with 43,686 in the same period a year ago.
Borrowers with smaller deposits are expected to have a particularly tough time finding a mortgage in the coming months as lenders continue to tighten their criteria in the weak economy, although there have been some recent signs of increased competition to attract those with larger amounts of equity.
Estate agents warned that the Chancellor risked "killing the goose that lays the golden egg" when he announced the 7% rate on £2 million properties in the Budget.
But George Osborne defended the move and said it is "fair when money is tight, and so many families could do with help, that those buying the most expensive homes contribute more".