According to property search website Home.co.uk, in 1995 only 184 homes sold for a seven figure sum in England and Wales, making them well and truly the preserve of the super rich. Since then – apart from the hiccup in 2007 - house prices have climbed steadily and in many areas, particularly London and the south east, are well above pre-downturn levels. The number of properties selling for over £1 million has escalated too.
The Land Registry’s House Price Index shows that in 2013, 11,028 properties changed hands in England and Wales for over £1 million. Over two thirds of these were in London. And in January 2014 1,011 £1million+ homes were sold, compared with 628 in January 2013. The average selling price in Kensington & Chelsea, the country’s wealthiest borough, is already well above the £1million barrier at £1,238,411 – a sharp contrast to Barking and Dagenham which offers London’s most affordable homes, with an average price of £238,909. Across London as a whole, Nationwide’s latest House Price Index reveals that over 6% of housing transactions involve properties over £1million, a proportion that’s doubled since 2007 when they accounted for only 3% of the total.
These days, everyone’s remarkably well-informed about house prices and many homeowners who have no intention of moving in the foreseeable future regularly scour the property portals to see if homes in their road have yet crossed the magic £1million threshold. The ongoing house price boom means that more people are property millionaires – owning homes valued at over £1million - than ever before. Statistics from property portal Zoopla show that in 2013, the number of British property millionaires rose by 255 per day - that’s 92,985 over the year - bringing the total to 393,127. London accounts for 61% of these, with 57,120 homes edging over the £1 million mark.
What does £1 Million get you?
A million’s all relative. Get anything from a 5 bed house in Wembley, to nothing at all in Mayfair.
Tracy Kellett of BDI Home Finders, a buying agent who sources properties for clients, finds that some are happy to pay slightly more for a property just to get into the millionaire bracket. “There is definitely a psychological tipping point at the million pound mark,” she explains. “Often I’ll hear from agents that vendors want ‘a one in front of it’ as £999,000 doesn’t make them feel like millionaires! I have won many a bidding war by encouraging my clients to offer a few thousand more just to tip it into the golden million pound park.”
But how does the proliferation of £1million+ properties affect the rest of the market? It’s symptomatic of the fact that as prices across the board continue to climb, an increasing number of would-be buyers are being excluded from home ownership and resigned to renting or living with their families for longer. This, in turn, puts pressure on parents who want to downsize but have to stay put to accommodate offspring. Those who are in a position to buy their first home – and pass the newly introduced mortgage affordability checks – are being forced out into the suburbs and beyond. This is changing the demographic in some neighbourhoods, where young professionals traditionally set up their first home but now can’t afford to do so. Second steppers are affected too as even with substantial equity, they’re priced out of moving from a flat to family home in London and having to look further afield. Until the balance between supply and demand is redressed, and while there remains a shortage of entry-level homes, this situation is set to continue.
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