Research from Lloyds Bank has shown that the number of homes sold for more than £1m fell by 11% in the first half of 2015, with higher stamp duty and the uncertainty regarding the general election causing the high end of the property market to slow.
The number of homes purchased for over £1m in Britain between January and June was 5,599, down from 6,303 for the same period in 2014.
In London, where property prices are at their highest, the number of million-pound homes that were sold also dropped by 15%. Nonetheless, the capital is still where the majority of high-value sales go through, with most of these concentrated heavily on central areas of the city – often known as Prime Central London (PCL). Kensington & Chelsea accounted for one in 10 sales over £1m, with Westminster not far behind (9%).
Despite this, the number of £1m-plus sales in the first half of this year was still three times higher than the figure for a decade ago. In addition, three towns outside London now have an average property price of more than £1m – Virginia Water (£1.7m), Cobham (just over £1m) and Beaconsfield (£1m).
This fall in sales in the prime market, the first since 2012, suggest that the stamp duty changes implemented by George Osborne in December are already having an effect. The changes, which were announced in the Chancellor’s Autumn Statement, meant stamp duty on a property costing £1m rose from £40,000 to £43,750. On a £2m property it jumped from £100,000 to £153,750.
Sarah Deaves, director of private banking at Lloyds Bank, commented: “The number of homes sold for over £1m has fallen sharply over the past year, with a pronounced slowdown in the prime and central London market. This may be the effect of the new stamp duty rates introduced last December and uncertainty generated by the election in May.”
High-end property firm Savills recently said it anticipated prices in the capital’s most wealthy areas to end 2015 down 2%, but that “the fundamentals of wealth generation and demand point to steady medium term price growth”. Savills predicts that by 2020 prices in PCL will have increased by more than a fifth.