Prices of UK's dearest homes rocket (and then they cancel Mansion Tax)

Knight Frank has reported that house prices in London’s £10m-plus market have shot up 9.4% in the last year.

The firm produced its report before yesterday’s announcement by George Osborne that he will not go ahead with introducing a mansion tax.

Knight Frank said that just one-third of buyers of so-called super-prime properties have come from the UK since 2010. But it did say that price growth slowed to 3% in the three months to August, and is predicting no growth next year, with a return to positive growth in 2014.

However, the new top rate of 7% Stamp Duty on individuals buying properties at this price bracket has not undermined the market significantly, according to Knight Frank.

t said uncertainty about tax changes, in particular a proposed new annual tax on £2m-plus properties owned by ‘non-natural persons’, has been having a dampening effect.

The extent to which that uncertainty has now been removed by yesterday’s announcement – made in newspaper and TV interviews – is unclear, but property entrepreneur John Hiscox, of property firm Yoo, said he was delighted.

He said: “Burying the LibDems’ nonsensical mansion tax idea will draw sights of relief, not just from rich foreign buyers but from ordinary folk who may not have moved for decades and as a result, may have seen their homes skyrocket in value.

“Week after week, we see political policies created solely to appeal to headline writers and out of touch politicians who have no understanding of business, with countless ideas conceived just to win a few votes. The mansion tax was one such idea.”