Whenever anyone talks about the current crisis affecting the UK property market, they often point to the number of unaffordable homes being bought and sold on the open market. In London especially, property in the city centre has become unaffordable except for the super rich, with many homes costing at least £3m. However, a report by The Guardian this week has stated that during the first few months of this year, the sales of property costing over £1m dropped significantly by 11% – so what does this mean for the UK housing market? Let’s take a look at the facts.
The figures printed in The Guardian, taken from data collected by Lloyds Bank, show that for the first six months of this year, 5,599 properties changed hands in the UK that cost £1m or more. This is compared with the figures from the same months of the year before, during which 6,303 of these homes were bought and sold. This drop of 704 sales accounts for an 11% drop in this kind of sale for 2015, which has led to many people claiming that the million pound housing market is starting to slow down. In London, the sales of million pound properties fell by almost 15% for these periods, yet it still accounts for the vast majority of the sales of this kind.
This decline in sales of one million pound and over properties is the first of its kind since 2012, and now many economists and property experts are seeking the answer to why this may have happened. Many people are attributing the drop to the new stamp duty brought in under the most recent budget announcement, which has increased somewhat. Others are suggesting that the fall is due to concerns about the UK economy brought on by the election earlier this year, when it was not clear how the new government would change the budget.
However, whatever the reason behind this, it spells both bad and good news for property buyers and sellers in the UK. First, the bad news, which is really only for people trying to sell properties worth over £1 million, who may now find it more difficult to do so. If you’re looking to buy a house for somewhere in region of £1 million, now may be the time to do so, as you can expect desperate sellers to lower their prices in a bid to make a quick sale.
However, not all of us are trading in sums of this amount, but this kind of slump does also bring good news about the state of the property market in the UK more generally. As these million pound properties fail to sell, experts predict that their prices will be lowered. It is being predicted that this lowering of prices at the top end of the market could perhaps be the beginning of the process by which the current inflated prices we are seeing across the market, from budget flats to million pound mansions, will reset themselves. For the time being, however, we will have to wait and see.