UK Edition
London's million-pound homes hit hardest by Brexit
Top-end homes in London are struggling to sell in the wake of the Brexit referendum, hitting prices and adding to evidence that the capital’s property market may have peaked for now.
The market for the most expensive homes was already slowing before the June 23 vote and analysts at UBS believe the referendum dented confidence further.
As a result the number of properties under offer has fallen since the start of July, while the number on the market without such buyer interest has begun to climb, and reversing sharp falls seen earlier in the year.
UBS looked at the ratio of properties listed on the market compared to the number that are sold subject to contracts being exchanged, as an indication of the number of buyers compared with sellers, and the amount of time a property must spend on the market before being sold.
The situation is most stark for properties costing more than £1.5m, a market that is mostly London-based.
A year ago there were roughly four-and-a-half times as many such homes on the market as there were homes sold subject to contract. That climbed in the early months of this year and picked up again after the Brexit vote, with the ratio now at a new high of more than 7.5 times.
By contrast, the cheaper end of the market – predominantly outside London – has barely changed, indicating buyer interest has not been diminished by the referendum.
The ratio for homes costing below £150,000 has remained just below one-times since February, and although the ratio for those costing between £150,000 and £250,000 has crept up, it too remains below the one-times level.
UBS believes this indicates the London housing market has been most affected by the Brexit vote.
Its analysts expect the number of transactions in the capital to fall by 6pc in 2016 and 10pc in 2017, causing house prices in London to fall by 10pc by the end of 2017, before the market resumes its upward trajectory.
The prediction comes as construction firm Berkeley Group warned that the government’s housing policies are harming London’s market, with increased transaction costs such as a stamp duty hike for landlords hitting sales.
Restraints on construction are also damaging, the company said, pointing the finger at the Community Infrastructure Levy charged by local councils on newly built homes.