Brexit uncertainty forces sellers of luxury homes to accept lower bids

New survey finds that 70% of homes on the market for £1m or more sold below their asking price

epa07757896 People relax on the foreshore of the River Thames in London, Britain, 05 August 2019.  EPA/NEIL HALL
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Britain’s luxury property market remained under pressure in July as more million-pound-plus homes sold for under the asking price.

Almost 70% of agents said the prices paid for homes marketed at over £1m ($1.2 million) fell short, according to the Royal Institution of Chartered Surveyors.

The report published on Thursday found heightened Brexit uncertainty weighing on the property market as a whole, with new Prime Minister Boris Johnson threatening to let Britain crash out of the European Union on October 31 unless a new deal can be negotiated.

RICS chief economist Simon Rubinsohn said the findings contain “little comfort” for the housing market. “Some support may be provided by an easing in the cost of money which could feed through into lower mortgage finance costs, but this may be insufficient to provide a spur to lift activity given the clouds hanging over the economy,” he said.

RICS said an index of prices returned to clear negative territory. Weakness was felt most in London, East Anglia and the Southeast, where values are expected to continue declining over the next year - despite a falling pound making it cheaper for foreigners to buy UK assets. Elsewhere, the outlook is brighter, with agents anticipating healthy prices gains in Scotland, Northern Ireland and Wales.

Rental prices are also expected to rise amid growing demand and diminishing supply, with landlords starting to sell up because of higher taxes, a ban on charging tenants one-time fees and proposals to abolish section 21 notices, which give landlords the power to evict tenants at the end of their contracts without reason.