The British multi-million pound property market heats up: crisis, do you say?

LONDON | Although less than 0.5% of homes in Britain would be affected by the increase in the stamp duty rate for multi-million pound homes announced in the 2012 budget, according to research by Lloyd, the very top end of the market just hit a historic high in sales. Does it need cool down?

The total number of sales of properties that cost at least one million pounds in Great Britain was 5% lower in 2011 (6,911) than in 2010 (7,256). This compares with a 55% increase in 2010 and was the first annual fall in sales in that section of the market since 2009. In total, there are an estimated 165,000 homes in Britain worth at least one million pounds. However, multi-million pound property sales rose to their highest level on record in 2011. There were 1,518 property sales worth at least two million pounds in 2011, a rise of 5% from 1,442 sales in 2010. This is the highest number of sales, in this price bracket, since records began in 1995. Sales of properties topping the two million pound mark were also 2% higher in 2011 than at the peak of the housing market in 2007 (1,484).

Suren Thiru, Lloyds TSB Housing Economist, said that the rise in the number of multi-million pound property sales over the past year compares to the weakening picture across the rest of the market,

“and it highlighs 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.”

In addition, the number of properties selling for over five million rose by 22% from 128 in 2010 to 156 in 2011, providing further evidence of the strength of sales at the very top end of the market. Over three-quarters (76%) of all two million pound plus sales in 2011 were in London (1,161), and more than half of all multi-million pound sales took place in just three boroughs: Kensington and Chelsea, Westminster and Camden.

The 5% rise in multi-million pound property sales in 2011 contrasted to the fall in sales across the rest of the housing market. Overall, total home sales in Great Britain fell by 4% from 728,550 in 2010 to 698,200 in 2011.