Ask any Englishman which area of society has seen the largest rise in prices in the last few decades and almost without exception you will hear the answer, “house prices”.
This is especially true if you pose the question in London. Even when there has been an economic slump, such as in the early 1990’s or more seriously in 2008, house prices in London have tended to keep on climbing. And figures just released show that in the past 20 years the number of residential properties in England and Wales which have sold for £1m or more has increased by 70 times.
Taking the country as a whole this is still a tiny minority of the overall number of sales, as it represents only 1.6% of total property sales. But when we take the top of the range – the London Borough of Kensington and Chelsea – we find that 57% of properties in the Borough which were sold in the twelve-month period to September 2015 went for £1m or more.
Kensington and Chelsea is the only area of England and Wales where the majority of properties sell for over £1m; even in the neighbouring Borough of Westminster, 42% of properties sold for £1m or more in 2015.
Move outside London and the number of million-pound properties falls significantly. The highest proportion of such properties elsewhere in England and Wales was in Elmbridge, Surrey (outside London, but classic commuter territory for those working in the capital). Here the price paid for properties exceeded £1 million for 16% of sales in year ending September 2015.
In fact, the number of properties across the country which sold for over £1m in 2015 was actually fewer than in 2014. In 2015 there were 13,679 sales of £1m+ property; in 2014 there were 14,431.
But this does not signify any overall fall in property prices. As this blog reported recently the average house price in the UK topped the £200,000 mark for the first time in 2015 (see, UK House Prices: Steady Climb Continues – For Now, 8 February 2016;).
What it does reflect is a change in the tax regime when properties change hands. At the end of 2014, the government increased the so-called “stamp duty” (the tax paid on all property deals over £125,000, and which increases according to a sliding scale). Stamp duty on properties over £925,000 increased from five to ten per cent, which seems to have deterred some sellers from putting prices too high.
One of the most significant changes in the last five years is that a newly-built property is now just as likely to sell for £1m as an older property. Five years ago older properties were twice as likely to command a higher price. This is especially true of flats; and notably in London. Many of them now include fully-fitted kitchens and en-suite bathrooms; this is a great convenience, but, of course, it comes at a price.
