Crash! The very top of the housing market goes into meltdown

There has been a crash in the super-prime sales market – classified as homes valued at above £10m.

According to new Land Registry data, the number of sales of super-prime properties was 86% down in the three months to August, compared with the same period last year.

There were just five transactions – all in London – compared with 35 in the same period in 2015.

No new builds priced at over £10m were sold at all. In the same period last year, they made up 23% of sales.

The average price paid for the top five most expensive properties also fell 25%, from £22m to £16.3m.

Property investment firm London Central Portfolio says that the reduction could mean a shortfall of £45m in Stamp Duty Land Tax receipts by the Treasury.

The most expensive sale between June and August this year, as recorded by the Land Registry, was £25m for a terrace house in Eaton Square, Westminster.

History suggests that UK house price crashes begin at the top before filtering downward, and also begin in central London before filtering outwards.

However, every housing market is different, and while there is famine at the top of the London market, there is feast at the bottom as prices rise across average properties.

Agents Jackson-Stops & Staff forecast that across the whole of Greater London there will be no properties available at under £120,000 by the end of this year. There are already no properties at under £100,000 – they died out completely in 2008.

In 1995 nearly 75% of London properties sold were less than £100,000.

The firm forecasts that properties under £200,000 will vanish by 2020.

The average house price in London is now £484,700, over twice the national average of £216,750.

In 1995, when the £10,000 London property disappeared from the market, nearly 75% of properties sold were for under £100,000.

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7 Comments

  1. Trevor Mealham

    If jokers like Osborne or Vince Cable had been in real business, they’d have been statistics in failed first / second year businesses along with many bankers who don’t have a clue how government policies can trash businesses and markets.

    Its time we had experienced qualified MPs.

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    1. JMK

      Well said Trevor.  I believe that in Canada their MPs must have experience relevant to the positions they hold.  So the question remains that if Osborne and Cable were to be given positions relevant to their experience what would they be????

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      1. Trevor Mealham

        @JMK

        ‘liquidators’  🙂

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      2. The_Maluka

        Solid waste disposal orifices

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    2. Mark Connelly

      A bit unrelated I know but Trevor has said all that needs said re the idiots that perpetrated this situation.

      Word on the street is that the government set out to reduce BTL by 20%. However it has reduced by 50%. Banks are squealing that their investment mortgage market has been decimated. Expect some reversal of Osbornes tax changes come the budget.

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      1. Trevor Mealham

        @ Mark – personally, I think Government encouraged BTL years ago to gain more landlords. Onwards be it landlord or agent, there’s more regulation and more coming in.

        Licencing is then topical and the requirement for properties that let to be of a standard, or for landlords to face having empty units that government has made noises about taking possession orders on.

        The other day we saw media make agents and public aware (again) of the crowd BTL buying ‘LOOPHOLE’ re tax. But is it. …. Is the bigger picture that Gov have a shortage of council housing and a way to gain units could be a trail of ‘must’ requirements, that when landlords fall at the next base, the property could just be a few steps away from council possession orders and compulsory purchases for Gov to rebuild a national housing stock.

        My view is that enticers like tax loop holes, could just be temporary measures to align landlords to provide housing councils don’t, or to open legislative loop holes to later walk in and take unlettable stock for council refurbishment.

        For sure the collective crowd ‘Ltd’ company ownership being encouraged, sure represents sheep, a dog and pens.  At that point landlords face shearing or the meat counter.

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        1. JMK

          Trevor, I think you’re contradicting yourself.  You point out that Osborne is an idiot and then credit him with brains.

          Actually I think he is a clever little sod but I don’t think his masterplan was anything to do with gaining housing stock as council houses.  It was mostly about tax take to pay down the deficit as was the so-called ‘pension freedom’ which netted the Treasury with £1.2bn of tax and then there’s all the country asset sell-offs (Air Traffic, Land Registry, Royal Mint, Student Loans, etc, etc).  All this was money grabbing to hit his personal goal of nailing the deficit by 2020.

          Alas is all of this is the fact that future Chancellors would have less tax revenue.  With rents set to rise to extraordinary levels I believe we will start seeing an exodus of our foreign workers, as they mostly rent.  Perhaps not the immigrants from poorer countries but the relatively wealthy ones would see little benefit staying here by 2020.  We therefore lose much of a valued workforce who will then not pay income tax, VAT and so forth.  And our population takes a step-function in ageing, which it is already doing very successfully on its own.

          With a much older population, little tax to pay for our NHS (and probably a lot of the staff will have sodded off too) I perceive our own younger generation will be well and truly stuffed.  Income tax has to rise significantly as will other taxes.

          Osborne will be the evil arch-villain behind all of this if S24 is not repealed.

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