01 May Million-pound home sales cool down
The number of homes that sold for more than £1million fell 5 per cent last year – the first annual fall in million pound-plus property sales since 2009. There were 6,911 homes sold for at least £1million in the UK last year, compared to 7,256 in 2010. This is in stark contrast to the same report a year earlier, which saw a 55 per cent increase in £1million property sales in 2010 from the year before, the research by Lloyds TSB says.
But despite this dip, the very top end of the market remains strong as multi-million pound home sales hit historic highs. The study found that up until 2011 at least, the very top end of the market has been ‘largely immune’ from the problems experienced by most buyers, who face tougher borrowing criteria to obtain a mortgage and rising mortgage rates. And while overall £1m-plus home sales have slipped, further up the ladder things are still going strong. Within the number of £1m-plus sales, there were 1,518 property sales worth at least £2million in 2011, a rise of 5 per cent from 1,442 sales in 2010.
This is the highest number of sales in this price bracket since records began in 1995. The figure was also higher than the peak of the housing market in 2007 when 1,484 properties over £2million were sold. More than three-quarters of £2million-plus sales last year were in London, an area which has been key in supporting the market as it has seen relatively strong price growth compared with the rest of UK due to high demand from overseas buyers. The One Hyde Park development in Knightsbridge, London, for instance saw one apartment sell to a Ukrainian billionaire last April for £136million.
In addition to the £2million-plus sales, the number of properties selling for over £5million rose by 22 per cent from 128 in 2010 to 156 in 2011. Homes which sell for more than £2million are now subject to a 7 per cent stamp duty rate which was increased from 5 per cent in last month’s Budget. This means a £2million house is subject to £140,000 in stamp duty, rather than £100,000 – a £40,000 difference. The rise has prompted concerns from some estate agents that numerous property chains could crumble as a result, causing disruption further down the ladder.
The study estimates that 0.2 per cent or 38,000 homes in Britain are worth at least £2million and could be subject to the new 7 per cent stamp duty rate if they went on the market, rising to 1.3 per cent of properties in London.
Suren Thiru, Lloyds TSB housing economist, said: ‘The rise in the number of multimillion-pound property sales over the past year compares to the weakening picture across the rest of the market, highlighting the strength at the very top end of the housing market. ‘Continued demand from wealthy cash rich buyers, both from the UK and overseas, as well as limited supply has meant that this segment of the market remains largely immune from the headwinds facing the vast majority of homebuyers.’
Wales, the North East and the East Midlands were the only regions to see a rise in million pound sales last year, although these increases were from low bases. London and the South East accounted for 84 per cent of all million pound sales in Britain in 2011 according to the study, which used Land Registry figures. In total, there are estimated to be 165,000 homes in the UK that are worth at least £1million.
According to official figures, total home sales in the UK fell by 4 per cent from 728,550 in 2010 to 698,200 in 2011.