The number of prime residential housing transactions has increased rapidly in the past two decades and even in the past five years alone, despite a slump in the number of sales in the wider marketplace.
In 1999, there were 1,254 transactions for residential properties valued at £1m and above.
By 2018 this had increased more than 12-fold to 15,445.
And for the ultra-rich, the number of transactions for residential properties valued at £5m or more increased at an even greater pace over the same period, up from just 22 to 323.
This comes despite the annual volume of all residential housing transactions across England and Wales falling from 1,194,025 in 1999 to less than 900,000 in 2018 - a slump of around 27 per cent.
The research comes from independent mortgage broker Private Finance.
Some of this additional activity in the high-end market is down to inflation of course: £1m in 2018 was the equivalent of £587,414 in 1999 according to the Bank of England’s inflation calculator.
Even taking this into account, however, there has clearly been an upsurge in high end property deals.
England and Wales saw 5,162 residential property transactions valued at £587,414 and above in 1999, compared to 15,445 valued at £1m and above in 2018.
Despite rumours of a prime market slowdown, over the past five years Private Finance’s analysis suggests an overall trend of growth, with increases in the number of £1m-plus transactions every year except 2018.
Transactions in the £5m-plus price bracket have been more volatile but have held above 320 for the past five years.
The top five most expensive areas in the UK have remained broadly unchanged, with Kensington and Chelsea retaining the top spot in both 1999 and 2019 – though average house prices for each area have undergone significant changes. In Kensington and Chelsea, for example, the average house price has risen from £309,698 to £1,295,861 – a percentage increase of 318 per cent.
Though the property market has become undoubtedly more expensive in the past 20 years, average mortgage rates have become far more affordable.
For example, the average two-year fixed rate at 75 per cent loan-to-value in 1999 was 6.19 per cent – today, this rate is now as low as 1.64 per cent. Similarly, a five-year fixed deal at 75 per cent LTV is now just 1.92 per cent, compared to 6.64 per cent in 1999.
This makes the cost of servicing a prime property mortgage more manageable.
A homebuyer purchasing a £1m home with a 25 per cent deposit would pay £4,920 per month if on a two-year fixed mortgage deal in 1999. Today, the same monthly payment would fall to £3,049.
“Though activity in the housing market this year has been subdued, the prime market remains supported by years of consistent growth. Less activity is to be expected given the ongoing political and economic uncertainty affecting the country, which has impacted the number of prime transactions in the capital in particular” explains Simon Checkley, managing director of Private Finance.
“However, once Brexit has reached its conclusion, we anticipate a rush of pent-up demand as the spectre of uncertainty is at least somewhat removed.
“Recent price falls will make UK prime property an attractive prospect for overseas buyers, and domestic buyers will be looking to get their property plans back on track. Independent mortgage advice is vital for prime buyers who often have complex income structures and, with such high values of stake, could skim thousands of pounds off their monthly repayments by selecting a competitive deal.”