The stagnant performance for the country is another disappointing economic indicator for the Government.
With prices approaching the 1 per cent stamp duty threshold of £250,000, it is now more important than ever that the chancellor revisits this at the next Budget and raises the ceiling, or risks further suppression of the market.
The 14 per cent increase in average prices in Prime London Central over the year underlines its continued global appeal despite the new property taxes unveiled at the last Budget.
The chancellor increased stamp duty to 15 per cent for individuals buying through a corporate vehicle and announced a consultation process on an annual levy of up to £140,000 per annum and a new capital gains tax.
The ensuing uncertainty has now been put to bed as the picture has become clearer, especially with the announcement that it will not apply to any genuine bone fide businesses such as development or buy-to-let investments. This is already providing another boost to the market.
But one element of the price increase is undoubtedly due to the fact that some buyers are now choosing to avoid the new tax measures by buying in their own personal names, in-line with the chancellor’s declared intention.
And with a significant increase super prime property sales in PLC from 2 in Q4 2011 to 20 in Q4 2012, it would appear that the Chancellor’s objective for companies to de-envelope is working.
PLC was not the only place to see high value sales. Camden registered four sales – three in Regents Park – over £10m. The most expensive purchase outside London, recorded in Land Registry, was in Bicester, Oxford. It sold for £23,495,000.
This quarter has also witnessed sales in England and Wales between £2m and £5m making a sharp come back from the shock of the increase in stamp duty from 5 per cent to 7 per cent in the last Budget. Transactions increased by 71 per cent over the last quarter, as buyers, who were holding back, came to terms with the increased cost of moving. The chancellor would be well advised to reflect on this, if an increase in stamp duty from 4 per cent to 5 per cent over £500,000 and 5 per cent to 6 per cent over £1m is on the agenda. It is very likely that these buyers will find it much more difficult to pull together the increased stamp duty costs causing a longer term dampener on the market.