London is a diverse city that is home to people from all different walks of life, something that’s reflected in its multi-layered housing market. But, since the June 23rd referendum resulted in a UK vote to leave the EU, one of those housing sub-sectors has been hit hard – the top end of the market, called Super-Prime Central London.
Luxury London estate agency Plaza Estates acknowledges there was always a fear a vote for Brexit would hurt the top end of London’s housing market: “London’s super-prime property market is the domain of the super-rich which includes a lot of overseas investors. If they think there’s a chance that London property prices could fall, they’re less likely to make an investment.”
Property management firm London Central Portfolio, recently conducted some research on the latest Land Registry property sale price data. They found there was an 86% decline in the number of prime central London properties that were sold in the three months since the vote, compared with the same period in 2015.
Land registry data shows there were seven times fewer super-prime properties (worth above £10 million) sold in London between June and August this year, compared with the same three months a year earlier.
That’s not all. The data also reveals the average price paid for the five most expensive super-prime properties was £16.3 million in 2016, representing a 25% drop from the average of £22 million a year ago.
“For many home-owners and Buy-To-Let (BTL) investors, these figures may seem astounding,” said Fulham estate agent, Lawsons & Daughters. “However, properties that are valued and sell at these sorts of prices are an important part of the UK’s tax revenue and economy.”
Indeed, LCP’s analysis suggests the UK’s Treasury is likely to see a decline in its stamp duty tax take, as a result of this decline in price and activity.
Of course, it’s not just the super prime London property market that has suffered since the referendum. In its October trading update, well-known London estate agency Foxtons reported a 34% decline in revenues from London property sales. Property sales revenue in the three months to the end of September 2016 was £12.2 billion compared with £18.5 billion in the same quarter of 2015.
While Foxtons laid the blame squarely on the UK’s decision to leave the EU, the company remains upbeat over the long-term future of London property prices. However, with a long-term view typically considering how a market will look in ten years-time, other estate agents and market analysts are facing up to a difficult, uncertain period for at least the next two-five years.
“While the dust on the surprise vote for Brexit may have settled for some industries, that’s definitely not the case for the UK’s housing market,” said Wimbledon estate agent Robert Holmes.
“Prices among more affordable homes could remain supported by the lack of available homes for sale, but anything that’s in the millions of pounds’ bracket will have to be priced and marketed in just the right way to secure a sale the owners will be happy with.”