London luxury segment faces longest slump in decades
IT was a symbol of the swagger in London’s luxury home market: a mansion in the trendy Notting Hill neighbourhood with a car elevator and a swimming pool that transforms into a ballroom at the touch of a button. But just over a year after Havona House was listed with great fanfare for £25 million (RM132.6 million), the owners of the seven bedroom house have taken it off the market, stymied by the longest price slump in decades.
The sale prices of top-end homes in the British capital have been falling for nearly four years, weighed down by a cocktail of tax hikes, a crackdown on money laundering and a glut of new properties. Uncertainty surrounding Brexit has only made things worse, and the recent decision to delay the divorce until Halloween means sellers’ long wait for the bottom will likely continue.
“It’s just not the right time to trade it,’’ said Becky Fatemi, a director at Rokstone, the broker that marketed Havona House.
The dining area inside Havona House. The pool area inside Havona House.
and discounts to attract buyers, said Marc von Grundherr, a director at agent Benham & Reeves. “Some are offering free furniture packs, some are offering rental guarantees,” he said. “They’re thinking out of the box.”
The twists and turns of the Brexit negotiations have compounded the market’s woes. The extension temporarily averted the extreme risks associated with a disorderly withdrawal, including a 30 per cent plunge in house prices, according to the Bank of England’s worst-case scenario. But this respite offers cold comfort to developers and home sellers who are impatient for the uncertainty to end.
“I’ve always said that what we could not cope with economically in this country is a long, prolonged period of uncertainty,” said Mark Preston, chief executive of the Grosvenor Group, the property company that owns large swaths of the upscale Belgravia and Mayfair districts on behalf of the billionaire Duke of Westminster. “And that’s now what we have got.”
The market for prime and super-prime housing remains challenging, and demand from overseas buyers has slipped in part because of the political uncertainty in the United Kingdom caused by Brexit, according to a statement from British Land Corecently. Changes to the rules on capital gains tax on property sales has also deterred investors from abroad, said the developer.
Increasingly there’s a sense that without a resolution of the political crisis, buyers will have little incentive to take the plunge even with the big discounts on offer.
“We have a number of buyers who are saying: ‘As soon as Brexit’s over, we’re ready to commit’,” said Alex Michelin, director of Finchatton, the luxury developer behind 20 Grosvenor Square, a Mayfair apartment project where prices start from £17.5 million. What the six-month delay does is “put us at this point of stasis again, where just nothing happens”, he said.
Sales of homes in London’s priciest districts fell to their lowest level in six years in the first three months of this year as buyers braced for Britain’s withdrawal from the European Union,
Sales of homes in London’s priciest districts fell to their lowest level in six years in the first three months of this year as buyers braced for Britain’s withdrawal from the European Union, originally scheduled for late March.”
Center Point luxury residential tower in London.