There is a "deepening new build crisis" in the London property market as investor demand shrinks, supply growth accelerates, and asking prices fall in the most saturated areas, according to London Central Portfolio (LCP), a fund manager which invests in the city's prime property.

There were 71,593 new units with planning permission in inner London in 2015, up slightly from 71,503 the year before. There were 22,023 new units under construction, up 24.5% over the year. Starts grew 6.3% to 12,592 and are primarily in the "mega cluster" areas around Tower Hamlets and Battersea-to-Nine Elms. New applications were 26.5% higher over the same period at 17,494, which LCP said includes 111 towers, mostly in Tower Hamlets and Battersea-Nine Elms.

But just 1,491 new units have sold so far in inner London in 2016, down 43% over the year. And the price per square foot around Battersea and Nine Elms is down 8% from its peak in 2014. LCP based its analysis on data from Land Registry and the London Residential Market Analysis (Lorema).

"In light of the plethora of tax hits over the last few years, possibly exacerbated by the uncertainty of Brexit, it appears foreign investors, the majority buyer of new developments, may finally be turning away," said Naomi Heaton, chief executive of LCP.

"These properties typically sell at a significant premium, averaging 25%, over older stock. History demonstrates that a saturation of over-priced commodity-style property leads to softening prices, particularly during times of economic uncertainty."

Over the past couple of years, the Treasury has increased stamp duty on expensive and additional homes, cut tax reliefs for landlords, and increased taxation on homes owned by offshore entities.

Heaton said the concentration of luxury development activity in the likes of Tower Hamlets and Wandsworth "will take a heavy toll on these areas where there is already extensive oversupply and the buying pool is shrinking thanks to ever more tax hikes."

On the whole, London is not building enough homes to meet demand. Around half of the 50,000 new units needed across the capital is currently being achieved. Many of those are towards the top end of the market and targeted at foreign investors looking for rental returns. But as investor demand cools, some luxury new builds are struggling to justify their asking prices.

Updated 02/09/2016: This article originally stated there were 106,208 new units with planning permission in inner London as of 2015, as per LCP's analysis of Lorema. However, this figure can include units that have been counted twice. This article has been updated to include figures directly from Lorema.