This marked the eighth month in a row in which year-on-year prices decreased in London, with prices having fallen by £2,000 since February.
The conflict in the Middle East also caused mortgage rates to soar above 5pc.
Meanwhile, Labour lowered the starting rate of stamp duty last April, meaning a record 30pc of first-time buyers in England were dragged into paying the transaction tax this year.
‘Start of anti-wealth politics’
In less than two years’ time, a new “mansion tax” will come into force on property valued at £2m or more. But the Government’s own analysis predicts the “high value council tax surcharge” will trigger a 2.5pc drop in house prices.
Mr Watson said: “We don’t know what will happen. There is definitely a view that the market isn’t going to get any stronger, and it will probably get softer.”
He is about to enter into two negotiations in the so-called “super-prime market”. He said his buyers were now “formulating an offer at a level that will probably disappoint the seller”.
But he added that sellers would probably be looking at even lower offers by the end of the year.
“This could be the start of anti-wealth politics,” Mr Watson added.
When asked last month whether he felt assets were fairly taxed compared with income, Mr Burnham said: “I think land is under-taxed.
“I look, as Mayor, at swathes of Greater Manchester that are land that is held, but there is no charge in terms of redundant land that is not used. I have long been persuaded of the argument for a land value tax.”
If the Government implemented a land value tax, bills in Westminster could increase by as much as fivefold, previous Telegraph analysis has found.
If a property tax were instead based on house prices, rather than land value, then bills in both Westminster and Wandsworth – the areas well known for having the lowest council tax bills – would roughly quadruple.
