Chancellor George Osborne’s crusade against wealthy home owners has taken a knock-back despite his budget measures to curb their spending.
Although the number of home transactions across England and Wales dropped by around 15% in 2012, the prime property market for homes worth £1 million plus was booming.
Figures from the Land Registry show rich home buyers were not deterred by a stamp duty increase for homes worth £2 million or more.
While the figures showed rises countrywide, London saw sales and prices at even a higher level.
The most expensive property to change hands in February was a house in Eaton Square in plush Belgravia, London, with a £20.45 million price tag.
Three years of growth
In the capital, for £1.5 million to £2 million price band, the numbers of homes sold was up 35% – from 81 to 109. The number of homes sold was up in the rest of the country as well – 22% from 106 to 129 properties.
According to property consultants Savills, the prime London property market has had almost three years of growth, even though the number of sales is below the historical average.
The firm suggests buyers have shifted from looking for London homes to rental properties to generate incomes, with the market fuelled by City buyers.
“Even though the forecast on City bonuses looks bleak, buyers seem to have had their fill of trophy and safe haven assets and are looking for investments that give an income,” said a spokesman.
Nevertheless, London was the only prime residential city to see a fall in rents during 2012, according to another property consulting firm, Knight Franks.
London rents fall
The firm tracks prime residential rents in 16 cities. On average, rents increased 1.6% in the last three months of the year and 5.1% in the year.
London rents plunged 3.2% in the year – while the leading rent rise of 17.9% was in Nairobi, Kenya.
The report also highlighted Hong Kong as the city with the highest rent rises since 2009 (42%), while Moscow reported the lowest (3.3%).
The Knight Frank index sits at 20% above the historic low reached in 2009.
“The continuing eurozone crisis is one of the factors that affected London rents,” said a spokesman. “This is coupled with uncertainty in the financial sector, especially over bonuses in the City.
Cape Town, South Africa, and Geneva, Switzerland, made up the other cities in the worst performing bottom three with London. Both had no change in rents over the year.
