Sales of top-end homes plunged by 40% as the Chancellor introduced a stamp duty hike on properties worth more than £2 million, new data by Land Registry revealed today.

The number of houses sold for more than £2million in March dropped to 124 from 205 the previous year, and a 7% stamp duty rate imposed on homes in this bracket towards the end of March, has caused estate agents to warn that some property chains would crumble as a result.

But George Osborne defended the move and said it was ‘fair when money is tight, and so many families could do with help, that those buying the most expensive homes contribute more’.

Elsewhere, the Land Registry said average house prices in May in England and Wales increased 0.5% on-month to £161,677.

The most up-to-date figures available show that during March 2012, the number of completed house sales in England and Wales increased by 25% to 58,609 compared with 46,742 in March 2011.

The highest increase in average property value over the last 12 months came in London with a movement of 7.7%. The capital also experienced the greatest monthly rise - an increase of 2.6%.