Rich foreign buyers are being driven away from London by hefty taxes and stronger sterling.

Marsh & Parsons said this morning that overseas buyers now account for only 21% of all London sales, down from 25% a year ago.

The firm also said that while overall buyer demand in London went up 4% in the third quarter this year, supply dipped by 5%.

CEO Peter Rollings said: “The London property market has had to grit its teeth and bear the brunt of some rather trying taxation changes in recent months.

“At the high-end, buyers are at the rock face of the new steeper Stamp Duty, and from overseas the strength of sterling, and government encroachments on nom-dom status make investing in the London property market seem daunting.

“This has cast some shadows over the capital, but the millions of Londoners who live and work in the city have acclimatised much more quickly to the property taxation changes, and have risen up to fill the void left by overseas purchasers and investors.

“We’re noticing longer purchase chains than ever as domestic buyers start to dominate the market, and demand is really putting a strain on supply.”