The number of homes changing hands for more than £1m dropped by 11% in the first half of the year, as higher stamp duty and uncertainty over the general election result slowed the top end of the property market.
Figures from Lloyds Bank showed the number of seven-figure homes bought in Britain between January and June was 5,599, compared with 6,303 for the same period in 2014.
In London, the centre of the property market boom, sales of million-pound homes fell by 15%. However, the capital still accounts for the lion’s share of top-price sales, and the most costly are still concentrated in areas in the centre of the city. One in 10 sales over £1m were in Kensington & Chelsea, closely followed by Westminster, with 9%.
Despite the fall, Lloyds said the number of £1m-plus sales was up threefold on the figure for a decade ago, and there were now three towns outside London where the average property price was more than £1m. In Virginia Water in Surrey, which has long been popular with wealthy buyers, the average price is now £1.17m, Lloyds said, while for nearby Cobham the figure is just over £1m. In Beaconsfield in Buckinghamshire, the typical house price now stands at £1m, the bank said.
The decline in sales in the £1m-plus market was the first since 2012, and suggests that changes to the stamp duty regime in England introduced by the chancellor in December have had an impact. Following the changes, announced in the autumn statement, the duty attached to buying a property costing £1m increased from £40,000 to £43,750, while on a £2m property it increased from £100,000 to £153,750.
“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,” said Sarah Deaves, director of private banking at Lloyds Bank. “This may be the effect of the new stamp duty rates introduced last December and uncertainty generated by the election in May.”
The change in stamp duty was a surprise to the property market and has led to price cuts in the prime property market, with a small number of sellers offering to pay the tax for their buyer. Recently, the seller of a £75m property at the One Hyde Park development in central London said they would foot the stamp duty bill on the sale. Previously, the tax would have come to £5.5m but is now almost £9m, and there are similar offers on some homes further down the price scale.
Ed Mead, director of estate agency Douglas & Gordon, said the issue was “fraught with tax implications”. He added: “Many buyers, particularly in the £1.3m-plus bracket, are effectively doing the same thing by offering around 10% off the asking price, which is roughly the stamp duty liability.”
Recently, property firm Savills said it expected prices in London’s most expensive neighbourhoods to end the year down 2%, but that “the fundamentals of wealth generation and demand point to steady medium term price growth”. By 2020 it said it expected prices in prime central London to have risen by more than a fifth.