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£2m-plus home sales at record level
Record numbers of multimillion-pound homes were sold in Britain last year despite the weak housing market generally, a study has found.
Homes which sell for more than £2 million are now subject to a 7% stamp duty rate which was increased from 5% in last month's Budget, prompting concerns from estate agents that some property chains could crumble as a result, causing disruption further down the ladder.
But the Lloyds TSB study found that up until 2011 at least, the very top end of the market has been "largely immune" from the problems experienced by most buyers, who face tougher borrowing criteria to obtain a mortgage and rising mortgage rates.
There were 1,518 property sales worth at least £2 million in 2011, a 5% rise on 2010 and the highest number of sales in this price bracket since the records began in 1995. This contrasts with the total number of home sales across Britain, which fell in 2011 by 4% year on year, to 698,200.
The number of properties selling for more than £5 million rose by 22% year-on-year in 2011 to 156, which the study said showed further evidence of the strength of top-end sales.
More than three-quarters of £2 million-plus sales last year were in London, an area which has been key in supporting the market as it has seen relatively strong price growth compared with the rest of Britain due to high demand from overseas buyers.
The study estimates that 0.2% or 38,000 homes in Britain are worth at least £2 million and could be subject to the new 7% stamp duty rate if they went on the market, rising to 1.3% of properties in London.
Suren Thiru, Lloyds TSB housing economist, said: "The rise in the number of multimillion-pound property sales over the past year compares to the weakening picture across the rest of the market, highlighting 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."
The study also found that despite the rise in sales of multimillion-pound homes, sales of £1 million homes dropped off slightly last year, with 6,911 sales, a 5% fall on the number in 2010.