More properties worth £1m or more are being sold outside of London, new research from Private Finance has found.
The highest growth in the number of £1m plus properties sold has been in Hertfordshire, Surrey and Essex and half of home sales in this price bracket are set to be outside of greater London in 2017.
According to the analysis of data from the Land Registry by mortgage broker Private Finance, the volume of £1m plus property transactions rose 195% in England and Wales from 2011 to 2016, compared to a 54% rise in total activity over the same period.
The study said that the trend comes despite cooling activity at the very top of the housing market after successive reforms to stamp duty in December 2014 and April 2016. The continuing rise of house prices across much of the country meant that sales worth £1m and over still rose 10% between 2015 and 2016.
Historically, the majority of sales in this price bracket have taken place in Greater London, which enjoyed a 63% share of the higher end market in 2011. London also recorded by far the biggest growth at 7,333 sales in the annual volume of transactions between 2011 and 2016, followed by Surrey at 818 and Hertfordshire at 676.
However, Private Finance’s analysis shows that this may be about to change, due to the sizeable increase in £1m plus property transactions outside the capital in recent years. From 2015 to 2016, growth in Greater London was outpaced by Hertfordshire, Surrey, Essex, Hampshire and Kent.
The report points out that this may prove to be a conservative forecast, as the latest indices suggest house prices are currently rising faster year on year in the East of England, the South West, the West Midlands, the South East, the East Midlands, Yorkshire and the Humber and Scotland than they are in London.
The analysis shows some of the biggest proportional increases between 2011 and 2016 were in South Yorkshire, County Durham and Swindon while the biggest percentage increase in £1m plus transactions from 2015 to 2016 was in Carmarthenshire in Wales.
Data from Private Finance for mortgaged purchases in the £1m plus price bracket between 2011 and 2016 shows the average loan to value (LTV) was 54%, rising to 56% last year. It said that this suggests home buyers in this part of the market are leveraging substantial amounts of their assets as six figure deposits.
Shaun Church, director at Private Finance, said: “Sustained house price growth in London means that even for many highly paid professionals, a large family home in the capital is now out of reach.
“With buyers looking further afield as a result, this has contributed to significant growth in the number of million pound plus transactions in areas like Kent, Essex and the Home Counties, which are all within easy commuting distance of London.
“Buying a million pound plus property is a significant financial commitment, and with increasing numbers of buyers falling into this category, borrowers may need to look to private banks and brokers to ensure they are able to access appropriate mortgage finance.
“These tend to offer a more bespoke, flexible service. For example, buyers might leverage unconventional assets like jewellery, fine art or sports cars as a means of obtaining their property. The lender will take into account how liquid the assets are and make a judgement as to whether the borrower could sell an item to repay the loan.
“Private banks are also able to offer interest only mortgages to such clients, giving them greater choice about when they want to repay chunks of capital, such as if they get an annual bonus. This type of flexibility can prove invaluable in ensuring borrowers can access the most affordable and suitable mortgage finance for them.”