Recent figures released by Lloyds Bank, reveal the number of property transactions with a value in excess of £1m to be 11% down in the first half of 2015. According to The Guardian the figures released in late October show a marked decrease from 6,303 in the same period (January to July) in 2014 to 5,599 this year. London in particular has taken a nosedive with the number of properties changing hands for more than £1m down by 15%. This is the first slump of its kind since 2012, so are we seeing a slowdown in the mercurial rise of property prices in London, and frankly a return to something more sensible?

In short, no. While reasons for the downturn in 2015 have ranged from uncertainty as to a red or blue dawn on 8th May, to the increase in stamp duty in December 2014, most authorities on the subject see this as little more than a blip on the ascent. Indeed according to Lloyd’s Halifax House Pricing Index prices in general, in the three months preceding September this year, increased by 8.6% from the same period in 2014. Furthermore these prices represented a 2% increase from the preceding quarter.

So hardly a slump to rival 2007 then, the most plausible explanation for the downturn in the numbers of properties selling for over £1m is actually quite simple. The increase in stamp duty for properties at the top end of the market may have actually contributed to a drop in asking prices. The practice of sellers paying the stamp duty for their perspective buyers by offering around 10% off the asking price (roughly the same as stamp duty liability) is becoming more prevalent in the ‘prime’ property market. A particularly high profile example of this being a seller of a property with the one

Hyde Park development offering to foot the stamp duty bill as part of the sale (as reported in the Standard http://www.standard.co.uk/news/london/owner-of-londons-most-expensive-property- offers-to-pay-9-million-stamp-duty-to-sell-luxury-flat-a2945256.html ). Whether this is widespread enough to have directly caused such a sharp decrease in super-six figure properties being sold is doubtful, but it remains the most convincing reason when taken in conjunction with the uncertainty of an election year.

What does this mean in the long term for London property prices? Simply put, we’re likely to see a resumption of service as usual in 2016. The recently published issue of London agent Savills residential property focus, maintains that whilst stamp duty will probably having a short term chilling effect on prime market prices, growth for the next five years will be relatively steady and could and prices could increase by as much as 21.5% by 2020. So if you were hoping to pick up a bargain basement flat in Kensington between now and next decade think again, Hartlepool however…..

For those particularly enamoured of statistics all those cited can be found either in Savills excellent research quarterly (http://www.savills.co.uk/research_articles/141280/193270-0 ) or The Lloyds Bank Halifax House Pricing Index (http://www.lloydsbankinggroup.com/media/economic- insight/halifax-house-price-index/), the latter comes with a health disclaimer as it’s very easy to get lost for hours on there.