Brexit crushing London’s luxury housing market
> High-end property at prime locations expected to fall by 9% this year, says estate agents Savills
LONDON: House prices in London’s prime locations will fall by 9% this year and not grow again until 2019 as buyers, already hit by increased property taxes, wait to see the outcome of Brexit divorce talks, estate agents Savills said.
Prices in prime central London, which includes the capital’s most expensive areas in Knightsbridge, Belgravia and Mayfair, have been falling for two years, according to Savills, hit by property tax increases on the costliest properties and buy-to-let and second homes.
But the outcome of the June 23 referendum has further dampened demand with some buyers biding their time before buying property and others bargaining down prices.
Savills said there would be no return to price growth until the talks on pulling Britain out of the EU, expected to start next year, reach a conclusion.
“Two further years of uncertainty ... are also likely to limit the prospect of any serious price growth over that period,” Savills’ director of residential research Lucian Cook said.
Property was one of the first sectors to be hit by the outcome of the Brexit vote with the largest housebuilders initially losing up to a third of their value and investors pulling cash from commercial funds.
Several national housebuilders and surveys suggest demand has returned, but central London, where foreign investors form a large part of the demand, is likely to be most affected by the uncertainty over the terms of a Brexit deal.
Prices in central London fell at their fastest rate in nearly seven years in August, according to consultancy Knight Frank.
Savills predicted that when prices do rise in 2019 it will be by 8% but the company also said that any demand upturn would depend on the level of taxation going forward and the terms of the Brexit deal.
“It probably means that London remains an attractive place to invest in prime housing, with a tax environment that is not prohibitive to those looking to acquire residential real estate,” said Cook. – Reuters