Super prime sales drop 86% according to new data

Super prime sales drop 86% according to new data

According to analysis of Land Registry data from London Central Portfolio, the last three months to August 2016 have seen 7 times fewer super-prime properties (above £10m) sold than in the same period last year.

Only 5 transactions were registered compared with 35 in the same three months in 2015. The average price paid for the top 5 most expensive sales also fell 25%, from £22m to £16.3m.

According to the data, the areas outside Prime Central London were hardest hit. Over the last three months, no sales above £10m took place outside London’s most desirable postcodes compared with 30% of sales last year.

Similarly, super-prime new build sales collapsed as buyers still keen to enter the market focused on the value-added opportunities offered by PCL’s more traditional, older stock. No new builds above £10m were sold over the last three months, compared with last year where they made up 23% of sales.

This fall away in super-prime new build demand is being corroborated by developers, with many looking to divide large, high priced property into smaller flats to increase their attractiveness. Clivedale, for example, is reworking its flagship Hanover Square development to create four times more units, whilst the green light has been given to Citygrove Securities and McClaren Properties to replace 7 Chelsea townhouses with smaller units.

According to LCP, these findings could significantly impact next year’s Stamp Duty receipts as top end sales, which were expected to counter lower levels of Stamp Duty under £1m, fall away and prices drop.


Naomi Heaton, CEO of LCP, comments: “Despite roughly stable Stamp Duty takings in the financial year to April reported by HMRC, next year may see a different picture, particularly as the it took account of a major rush in March. Transactions increased 72% over February as buyers sought to beat the 3% Additional Rate Stamp Duty (ARSD) deadline, buoying overall receipts.”

Whilst the financial year 2016-17 will see higher individual receipts from the new ARSD, LCP’s latest 3 monthly research shows that the Government already faces a £45m reduction in Stamp Duty in the super-prime sector over this period alone. This could make for some worrying reading for Chancellor Hammond as he considers ways of increasing tax receipts in the Autumn Statement.

Historically, according to LCP, PCL’s discretionary high value sector witnesses far more volatility than the lower value end of the market in periods of economic and political turmoil. It has seen three rises in Stamp Duty between 2012 and 2016, a rise of 5% to 15% for some purchases and he introduction of the Annual Tax for Enveloped Dwellings in 2013.

According to Heaton: “A price correction was inevitable and is widely reflected in reports of price discounting. Whilst the long term outlook remains compelling as a global destination with limited stock available, the luxury market is likely to experience continued instability especially in the face of the forthcoming ‘look through’ non-dom inheritance tax. Just as we have seen in the past, it may take some years to correct, with prices recalibrating themselves before growth returns.”

Heaton concludes: “Overall, this slowdown in the luxury property market – a big contributor for the Exchequer and UK economy - is very concerning. As the Government faces the daunting task of negotiating Brexit together with a potential slowdown in the UK economy, it should consider its strategy on residential property taxation carefully to ensure it meets its objectives of increasing revenues. Ironically, the rapid devaluation of sterling, now attracting foreign investors back to London, may be the biggest hope of salvaging a potentially embarrassing and costly situation.”

Top 5 most expensive sales (June – August 2016)

1. £25m for a terraced house: 112 Eaton Square, City of Westminster, SW1W 9AE
2. £16.9m for a terraced house: 6 Grosvenor Gardens, City of Westminster, SW1W 0DH
3. £16m for a flat: 79 Grosvenor Street, City of Westminster, W1K 3JU
4. £13m for a semi-detached house: 11 Chelsea Square, Kensington and Chelsea, SW3 6LF
5. £10.2m for a terraced house: 32 Thurloe Square, Kensington and Chelsea, SW7 2SD

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Latest Comments

MBM Homelets
MBM Homelets 23 Mar 2017

Although this is a very positive step, there is little or no guarantee of the standard of workmanship employed by the tenants. We have had experience of a professionally decorated property being ' painted'...

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ajay
ajay 21 Mar 2017

How is the "robust evidence" looking now?

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NathanG 20 Mar 2017

I've been watching the series so far and am completely baffled by the cases that were presented. Though, I don't think that we can protect ourselves from every scam possible - it will just make the scammers...

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Landlady14 01 Mar 2017

You would think so Niraj Shah! My experience only proves that there are varying qualitiers of professional in all aspects of property letting. None of the ones I have dealt with, from letting agents to...

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Mark
Mark 01 Mar 2017

Thanks for this article. Hopefully one day everybody's lifestyle will be eco-sustainable.

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Ben Taylor
Ben Taylor 28 Feb 2017

I was convinced that London was the most expensive!

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Alan Read
Alan Read 28 Feb 2017

Australia are leading the way in this I think. The trouble with Britain is we don't get enough sun to make use of solar power.

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James Powell
James Powell 27 Feb 2017

This is a very good news.

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DanHumphreys
DanHumphreys 27 Feb 2017

It sounds like a good idea. Anything to help the younger generation get a foothold.

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Matt
Matt 20 Feb 2017

Is this fake news?

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Matthew Hollywood
Matthew Hollywood 07 Feb 2017

Matthew Hollywood - Director Mishon Mackay Land & New Homes - Brighton The shortage of New Homes is in part effected by the lack of land sales. Land sales are held back because there is a disparity between...

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CommercialTrust 30 Jan 2017

Hi Graham, Would be interesting to see the above figure calculated against an investment via a Lt Company /SPV structure and if the investor found themselves pushed in to the higher tax bracket. Mortgage...

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