How Brexit has hit London house sales
THOUSANDS of house sales across London have collapsed since the Brexit vote as alarmed buyers scramble to pull out of “overpriced” deals, the Standard has learned.
The surge comes amid growing evidence of a sharp fall in prices since the June 23 referendum — with one early survey suggesting a 12 per cent drop.
The fallout is most severe in the centre of the capital, where agents said up to two-thirds of offers they were handling on the day of the vote have been withdrawn or are being renegotiated.
Chains of deals i nvolvi ng family homes across residential neighbour- hoods and into the suburbs have also come unstuck as a direct result of the Brexit bombshell. Harry Speller, 36, and Meg Newman, 37, lost a £605,000 offer on their home in Forest Hill within hours of the result. Mr Speller said: “We thought Brexit would only affect high-end flats and luxury homes. But our estate agents said loads of people dropped out of deals that day.”
Data from property analysts Propcision suggest the number of sales falling through in London has almost doubled from around 5 per cent to more than 9 per cent. Property buyer Henry Pryor said agents were scrambling to keep chains intact. “I have heard of the people at the top end of the chain offering to buy the £200,000 flat at the bottom end just to make it all work,” he said.
According to reallymoving.com, central London prices slumped 12 per cent in the first month after the referendum — with 10 per cent coming in the first week. Chief executive Rob Houghton said: “I’ve never seen a week where we’ve seen a change that dramatic.”
Transactions collapsed by 44 per cent as the market ground to a halt.
James Benson, head of sales at Westminster estate agency Bensons, said: “Buyers are feeling very nervous. So much dust has been thrown into the air by the referendum. Nobody knows when it’s going to settle and how.”
He said a third of deals had collapsed, a third were being renegotiated and a third pressing ahead regardless.
Other agents said increasing numbers of “desperate vendors” are prepared to accept price cuts. Matthew Wright, of the Marylebone and Mayfair branch of Winkworth said: “The rule of thumb is people are offering 10 per cent below, but we have had offers at 50 per cent below and plenty at 20-25 per cent.”
Figures from property analysts LonRes showed the number of properties being reduced jumped by 163 per cent in the 12 days after the vote.
Agents JLL said this week the owners of a triplex penthouse overlooking the Houses of Parliament were prepared to accept offers as much as to £1 million below the £6 million asking price to secure a sale by the end of August.
The asking price of a two-bedroom flat in the Riverlight development in Vauxhall has been cut from £985,000 to £845,000 to secure a quick sale before the completion of the scheme. Christian Barr, of agents My London Home, said the cut was “related to Brexit.”
But developer Harry Handelsman, founder of the Manhattan Loft Corporation, was upbeat: “The result was disappointing but, having lived in London for 25 years, I believe in its resilience.”
TODAY’S revelation that a considerable number of prospective house sales have fallen through in the wake of the EU referendum result should not cause undue anxiety. It was inevitable that a vote for Brexit would cause uncertainty in the short-term, and the fact that some potential homebuyers have decided to be extra cautious about an important life-decision is not wildly unreasonable.
In addition, a slight corrective to property prices is not intrinsically a disaster. For first-time buyers in particular, it could be a boon. For existing homeowners, there is the reassuring knowledge that, in the event that they decide to move, the modest downward trend will affect the property they purchase as well as the one they sell. And in any event, it seems likely that we are seeing a more or less temporary blip in the market. The fact is, many people still want to live in London and when the immediate shock of last month’s vote begins to settle, they will feel more confident about putting down roots here.
Indeed, the news today that GlaxoSmithKline has decided to invest £275 million in three existing sites in the UK is a strong indicator that business remains confident of Britain’s long-term economic outlook. Perhaps even more than that, major corporations are recognising that now is actually a very good time to invest. That is why it is so important for London to be positive about the prospects here for growth — if businesses are looking for new opportunities they should look no further than the capital.