Rich pump cash into property

Rich pump cash into property

The number of new property millionaires in Britain has risen six-fold over the past seven years, creating housing "hot spots" in the north while underlining the strength of London and the south-east.

Research published yesterday shows that sales of houses fetching more than £1m have jumped from 622 in 1998 to 3,824 last year, with every sign of another big leap in 2005 as the wealthy offload spare cash into property as an alternative to the stock market.

Using Land Registry data and then creating a league table from postcode districts, property consultants Savills have given Chelsea, Knightsbridge, Belgravia and Kensington the top four rankings, with other well-heeled parts of central London close behind.

Emerging hot spots such as Battersea, solidly working class until much of its council housing was sold off in the 1980s, is fast catching up.

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But with demand for high-value properties fast outstripping supply in the capital, wealthy buyers are turning to the home counties as an alternative, according to Savills.

While Weybridge in Surrey, Cobham in Kent, and Ascot in Berkshire are predictably high up the rankings, wealthy parts of Cheshire - in effect suburbs of a resurgent Manchester - have leapt up the table, just below Oxford which is now equal 42nd with Henley. As a result, places like Bowdon, Hale and Wilmslow - footballers' country as well as an alternative stockbroker belt - are challenging the south.

"It's clear these sales are funded with a lot of equity and people are putting extra money into property as a traditionally safe investment," said Richard Donnell, head of Savills Residential Research. "But we're now seeing a shortage of 'top end' properties in London and the big rises are now likely to be in the home counties."

In the south-east, however, wealthy prospective buyers might be disappointed. Large detached houses, in spacious grounds - the most sought-after properties - are now at a premium because planning guidelines from the deputy prime minister, John Prescott, stipulate that housing must be built to higher densities. This means that houses are now invariably tightly packed, with much smaller gardens.

As a result Pierre Williams, of the Housebuilders' Federation, said that few, if any developers, were now building large detached homes.

"The figures speak for themselves," Mr Williams added. "The reality is that the [guidelines] have been hugely successful in driving up densities and producing smaller homes and this inevitably reduces the number of substantial detached houses. And if they don't make them any more they go up in value."

But at the other end of the market, buyers on lower incomes are also being squeezed. In greater London, the average house price has more than doubled, from £128,000 to £287,000, since 1998. With more people squeezed out of the market, Gordon Brown is expected to announce new measures to help first-time buyers in next month's budget.

Guardian Unlimited © Guardian Newspapers Limited 2005