The number of homes sold for more than �1m this year is set to double within the space of only three years, according to research by the UK's biggest mortgage lender.

The rapid pace of house price inflation over the last few years has led to a significant increase in the number of property paper millionaires

Martin Ellis, Halifax

Halifax estimates that by the end of 2002, 2,600 �1m properties will have been sold.

This is double the number of 1,305 homes sold in 1999.

Most sales were concentrated on the southeast and, in particular, Greater London, where �1m property sales exceeded 1% of total sales in the first half of the year for the first time.

The Halifax said that it may only take another 50 years before the average price of a house hits �1m.

Million-pound homes

Since 1995, the number of �1m plus sales has increased almost elevenfold.

During 2001, 2,434 properties valued at over �1m were sold compared with only 232 in 1995.

Earlier in the year the average UK house price broke through the �100,000 barrier.

Assuming house prices rose at an average annual rate of 4.5% over the next 50 years, the average price of a house in the UK will hit �1m, the Halifax said.

Under the same scenario, the average price in London will break the �1m mark 13 years earlier in 2039.

North-south divide

Greater London and the South East account for between 91% and 95% of all �1m-plus sales in England and Wales, the Halifax said.

But there are still few property sales of more than �1m in northern England.

Only eight properties in the North and three in Yorkshire and the Humber were sold for more than �1m during the whole of 2001.

There has, however, been a substantial rise in the North West in the past few years with the number of �1m-plus sales increasing from only one in 1997 to 31 during 2001.

Most of these sales are thought to have been in Cheshire, Halifax said.

Martin Ellis, group economist at Halifax, said: "The rapid pace of house price inflation over the last few years has led to a significant increase in the number of property paper millionaires.

"Rising property prices will have helped to cushion the blow of falling share prices for many of these people, but it does mean that more and more homeowners need to be mindful of the potential inheritance tax liability that this creates."