Sunday 25 February 2018

London market hit by Brexit fears

Home for sale in London: Brexit is being blamed for a slump in the market. Photo: Reuters
Home for sale in London: Brexit is being blamed for a slump in the market. Photo: Reuters
Charlie Weston

Charlie Weston

Brexit is being blamed for a massive slump in the housing market in London.

New figures show that more homes are being withdrawn from the market in central London than are being sold.

This is seen as the latest sign of a depressed housing market in the British capital.

A startling 58pc of properties taken off the market so far this year were withdrawn rather than being sold, according to data from research firm LonRes.

Estate agents say uncertainty in London has been worsened by the vote to leave the EU.

Central London has traditionally seen a large number of international buyers.

It is the first time in seven years that the number of properties pulled off the market has exceeded the number sold, according to the research reported by the 'Financial Times'.

Head of research at LonRes Marcus Dixon said the property market in the British capital was now in decline.

"This gives you an idea of just how sluggish the market is," he said. "There are large numbers of people in properties they would really rather sell."

The fall-off in sales of homes comes as the prices for expensive homes fell following a period of rapid growth.

Prices per square foot in central London are reported to have fallen 4pc since their 2014 peak.

A fall of 11pc has been recorded for the most expensive "prime central" areas.

The vote just over a year ago for Britain to leave the European Union has meant that foreign buyers in particular are less likely to buy properties in London.

It is also taking longer to sell a property.

Sellers are now having to wait more than five months to close a sale, while those withdrawing typically give up slightly earlier, after 161 days.

Mr Dixon said withdrawals were "an important barometer of the market".

Estate agents have seen transaction levels decrease by 11pc in the first half of this year.

The LonRes research covers plush districts including Kensington and Chelsea, along with less exclusive areas such as from Canary Wharf in the east to Richmond in the west and Hampstead in north London.

Mr Dixon said vendors were being deterred by lower offers.

They were also being discouraged by the increased costs of moving since a 2014 overhaul of stamp duty increased the tax on homes costing more than £937,000 (€1m), which is below the average house price in some central London areas.

A further 3pc surcharge for second and additional properties was introduced last year.

"You've really got to want to move to pay out all that money, but if you hold on to what you have, the holding costs are really quite low," Mr Dixon said.

However, he highlighted a lack of forced sellers. Unlike during the 2008-09 crash, the flagging housing market has not been accompanied by a sharp deterioration in the economy.

"The housing market has slowed considerably but not a huge amount of people are losing their jobs or finding themselves unable to pay their mortgages," he said.

"It creates a strange market in which lots of people are staying in properties that aren't very suitable for them any more."

Separate data from Hamptons International last month showed that continental European buyers had largely ceased buying new homes in exclusive central London areas since the huge uncertainty created by the Brexit vote.

Irish Independent

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