The very top of Britain’s property market is slowing down and it’s a sure sign that some of the wealthiest middle-class are struggling with rising prices.
New statistics released Wednesday by the Land Registry show that the number of properties sold costing over £1 million ($1.53 million) has dropped substantially over the last year. In London the number of million pound properties sold went down by 16%, far higher than the national fall of 9%.
Houses costing over £2 million ($3.06 million) were even worse hit, and in the capital 26% fewer changed hands than in the previous year.
London is clearly still the place to go for super expensive properties, as 225 of the 288 homes costing more than £2 million sold between July 2014 and July 2015 were in the capital, but that number has fallen by 78 properties in the past year.
Along with the data produced by the Land Registry, research from LonRes commissioned by the Financial Times earlier this month also showed that the number of homes sold between £1-2 million fell by 22.5% in the three months up to September. It also showed that as many as 35% of prime homes have had their asking prices cut.
Deutsche Bank called the top of London’s crazily hot property market in October, with Sahil Mahtani, a Deutsche associate, saying that “London’s property is unlikely to enjoy the next thirty years as it did the last.”
Much of the blame for the fall in super expensive sales lies at the door of stamp duty changes. Since the Land Registry last crunched the numbers in July 2014, Chancellor George Osborne has fundamentally changed the way stamp duty is calculated.
In last December’s Autumn Statement, Osborne announced changes that meant all but the most expensive houses would have to pay less stamp duty.
Since the changes came into force, all houses costing above £937,500 ($1.44 million) pay more stamp duty than before. For example, a house costing £2.1 million ($3.22 million) will now be subject to £165,750 ($253,000) in stamp duty, £18,750 ($28,700) more than at the same time last year.
Overall house prices in the capital rose by almost 10%, according to the Land Registry’s data, despite the drop in sales for the most expensive properties. The average price for a property in the capital touches the £500,000 ($766,000) mark.
Land Registry data lags behind that of the Office for National Statistics. The ONS already indicated in July this year that house prices in London average over half a million pounds signalling prices are seemingly spiralling out of control. While this has been bad news for first time buyers, it now it looks like it’s the wealthy that are struggling with prices too.