Brexit realty bargains are only for the rich

Calling a bottom to London property seems an exercise bordering on the mad

There’s a price for everything, even in Brexit Britain. London’s absurd property bubble is a case in point: Even with the threat of foreign investment drying up, financial-sector jobs heading abroad and emerging-market cash under scrutiny, rich bargain hunters are stirring again.

Between June and July prime property in the centre saw no price change at all, according to Knight Frank, while year-todate values dropped between 1 and 2 per cent. Values for super-prime residences, above the £10-million mark, grew 2.2 per cent in the second quarter from a year earlier. More prospective buyers are looking, and more deals are being done.

This hardly offsets the price destruction that’s already happened. Central London’s best districts have fallen almost 18 per cent from their 2014 peak.

Calling a bottom to London property seems an exercise bordering on the mad, given the not impossible risk that in 2019 the UK might crash out of the European Union and install Jeremy Corbyn as prime minister.

Chinese money may be cooling after a domestic crackdown on wealth abroad, but Japanese investors’ appetite for European real estate is rising.

Sterling’s weakness offers an extra discount to foreign buyers, who still account for a fairly big chunk of London money. This softens the pain of higher transaction costs and taxes.

Different calculus

Top-end asset owners have a different calculus. Being able to dictate the price on a trophy asset in a Western capital offers its own advantages, especially to wealthy investors who prioritise lifestyle and personal security over things like jobs. Facebook, Apple and Google are throwing up huge temples to technology in London, and their workers will need a place to stay that generates tenants.

The ability to trade up or take advantage of a Brexit discount is not trickling down. Many Brits still can’t afford to scrape together a deposit or get on the property ladder. For those tied to a mortgage, the Bank of England’s recent quarter-point rate hike is another burden.

The London property bust has eased at the top of the market, but its levelling effect has yet to make an appearance.