Do you and/or your clients prefer fantasizing about buying luxury housing in London rather than the Hamptons, if, that is, you and/or your clients must choose between one location or the other? If yes, there are hundreds of real estate agents in London who would be more than happy to assist you and/ or your clients in finding the flat of your dreams.
Over the past three months, the largest real estate agency trading on the London stock exchange, an agency with over 50 agency brands and 900 locations, has watched its stock price drop 86%. (If that’s not enough to give an investor a headache, I don’t know what is.)
In May of this year, this agency attempted but failed to raise funds for a capital-refinancing plan. A company spokesperson for the company said, “…(the failure to raise these funds) may also be compounded by “…the further downturn in the US housing market or conditions adversely the UK mortgage market.”
Other top real estate agencies in London are also experiencing real-time nightmares. Countrywide has taken a L242M pre-tax loss for the first half of 2018. Its group revenues are down -9% to L303M. Foxton’s, a bellwether firm associated with gentrification of capital investments has taken a $2.5M loss the first six months of this year. Just last year, Foxton enjoyed a +$4.8M profit during this same time period.
A London real estate data firm, Residential Analytics, tells us that the sales volume of housing units in London has dropped -20% over the last 4 years. The real estate agency Right Move, tells us that prices in London declined -0.5% in July 2018 compared to June 2018 and that prices in July 2018 were -1.7% lower than in July 2017.
Housing experts speculate that low levels of sales activity are being caused by political and economic uncertainty due to Brexit and stamp duty land taxes (essentially property taxes). (The London School of Economics indicated that stamp duty taxes have now climbed to over one third of an average annual salary.) And, like in the US, rising interest rates, as dictated by the Bank of England Monetary Policy Committee, are casting long shadows on potential buyers’ dreams of homeownership.
Additionally, there is rising competition from no-frills online agencies that are offering real estate buying/selling services at reduced prices. Purplebricks, a relatively recent upstart to the London scene that has already entered US, Canadian and Australian markets, now has a market cap over 2- X the size of Countrywide.
Residential Analytics said that first-time owners have been hit most acutely by home price declines. Prices in July 2018 were -3.5% lower than in July 2017 and that these first time owners are no longer making money on there home investments. This state of affairs is a vast contrast to +20% annual growth figures just 3 years ago.