Brexit discount making London property affordable
The property sector is one of those economic sectors that were hit by uncertainty after Great Britain voted to leave the European Union (EU). Furthermore, sheer price cut in property prices and a drop in the value of pound have created a “Brexit Discount” situation in central London property market, especially for the most expensive properties – so you can avail this opportunity and save millions of pounds.
As per news resource, a Canadian buyer has recently grabbed a 7 bedroom property with a pool two weeks at £11.5 million, which was originally listed at £14 million. This property is located in Holland Park, London and had been on the market for the last eight months. The property buyer has definitely snapped up a good property and most importantly, at a discounted rate, compared to the price what they had been paying two years ago.
However, real estate experts state that the discount should not be related to Brexit because the property prices had started falling much before the referendum – partly due to hike in stamp duty tax on high-end property imposed in December 2014, and on the second home and buy-to-let properties in April. And after the vote, the prices of posh properties in central London fell by 1.5 per cent- the biggest fall in almost seven years.
Uncertainty is Poisonous
Since the vote, the potential buyers have requested discounts anticipating the political climate and economic uncertainty of the United Kingdom. However, there is little official data available to prove on how Brexit has impacted economy so far and how it will – ranging from a dip in the property market to a boost to travelling industry due to fall in sterling.
A sheer drop had been witnessed in the UK house prices since the beginning of 2016, as asking prices fell across nationwide, with London recording the biggest drop. On a comparative basis, there was a 2 per cent fall for the month of July compared to the same month a year earlier in the number of “instructions”, when estate agents are hired by sellers to put their properties on the market, according to Countrywide research data.
“Uncertainty is generally poison to markets so you are going to see people beginning to wait and see what comes out of it,” Chief Economist Fionnuala Earley stated. Summer is generally a slower period for the London property market as most of the potential investors are on holiday but the autumn also appears to be less active this year.
Stamp duty was increased in April, paid by the second homes and buy-to-let properties buyers – adding a surcharge of 3 per cent – made several buyers purchase earlier in the year, leading to a dip in the upcoming months coinciding with the run-up to the referendum. Buyers were already paying more tax on properties worth more than £937,000 after the changes in tax values since December 2014.
It is also observed that around 80,000 homes were listed on major portals in London in the second half of 2015 with half of them under offer and since then, the number of homes has increased to 100,000 but only a third of them are under offer.
This trend indicates slowing of the market, which pre-dated the referendum and is more pronounced in higher-end assets. And all the foreign property owners, who have a strong holding capacity, are not willing to sell their property because of the unfavourable pound exchange rate. Most of the experts believe that the situation will prolong as no recovery of the market is in view until 2017.
Please submit your enquiry and a member of our team will get in touch with you soon.