London’s once-booming prime real estate market has been almost unrecognizable since England’s seismic vote in 2016 to exit the European Union. Home prices are 18.4% lower than their 2014 high, according to international real estate advisor Savills. UBS reported in the first week of January 2018 that 39% of current home listings have gotten at least one price cut.
Since the Brexit vote, nearly half of London’s luxury developments stand empty. One revamped skyscraper halted sales after too many “detached from reality” lowball offers. Even Foxton’s real estate brokerage, one of London’s most established, has or is scheduling the closure of 6 of its affiliate branches including its flagship Park Lane office.
Some property experts are seeing “much potential” in this foggy, gelatinous market, despite the -14.7% drop in annual transactions during all of 2018. International buyers are taking advantage of the pound’s -12% depreciation against the Euro and -5% drop against the US dollar.
Marcus Dixon, head of research with the data company LonRes (tracks London’s sales and letting) thinks the market will benefit from pent-up demand. “A lot of people are waiting to move and buy. They’ve got the money in the bank and once there is greater certainty, they’ll come back into the market.”
Knight Frank agrees with Dixon. Their data show +12.5% increase in the number of new prospective buyers in Q3 2018 compared to the same period last year.
But make no mistake about it. Wealthier would-be buyers are just as concerned about the prospect of higher taxes as less wealthy would-be homebuyers are. And odds are that higher taxes may soon be realized as Brexit negotiations conclude.
Savills recently published/updated its 5-year housing market forecast with the optimism to say that the current market “pause” will last a short while and then bounce back +6.4% in 2021. Overall, Savills sees a total rise of +12.4% over 2019-2023.
Henry Pryor, formerly with Savills and now a buying agent and market commentator, is even more enthusiastic about the London market. “If you want to buy a house, there has never been a better time.” Price drops from 30M pounds list to a 15M-pound sale and 855,000 pounds to a 700,000-pound sale simply echo Pryor’s words.