Luxury London home sellers get message and rush to slash prices

Prime property vendors in the UK capital have bowed to the reality of post-Brexit pessimism and the after-effects of a tax hike and have started cutting asking prices.
A 45-bedroom mansion that once belonged to the former Lebanese prime minister Rafik Al Hariri in the upscale Knightsbridge neighbourhood of London. Vendors of high-end properties in the city are now cutting asking prices. Stefan Wermuth / Reuters
A 45-bedroom mansion that once belonged to the former Lebanese prime minister Rafik Al Hariri in the upscale Knightsbridge neighbourhood of London. Vendors of high-end properties in the city are now cutting asking prices. Stefan Wermuth / Reuters

Sellers of luxury homes in London are lowering asking prices as the effects of the Brexit vote, political uncertainty and high taxes sink in amid sliding demand.

The number of owners cutting prices for prime homes in the capital jumped 75 per cent in the 10 weeks following the June 23 vote compared with the same period a year earlier, according to data compiled by the researcher Lonres. There was a 33 per cent increase in the 10 weeks preceding the vote, the data shows.

Vendors were already contending with sales tax increases to as much as 15 per cent for the costliest homes when the June 23 vote to leave the European Union sent a shudder through the London property market. Values for properties in Chelsea and Knightsbridge declined 8.9 per cent and 6.8 per cent from January through August compared with a year earlier, the estate agent Knight Frank said this month.

“The real damage was already done over the past year, with stamp duty hikes and the 10 weeks after June 23 was when sellers had to get real about pricing,” said Roarie Scarisbrick, a partner at Property Vision, a broker that advises prime-home buyers.

Prime central London properties sold since the vote have achieved an average of £1,784 (Dh8,641) per square foot, or 3.8 per cent less than in the same period a year earlier, the data shows. Sales fell 42 per cent in the 10 weeks after the vote and new instructions dropped 25 per cent, according to Lonres.

Countrywide, the country’s largest estate agent, expects values for properties in prime central London to fall by 6 per cent this year. That compares to a 3.5 per cent increase for homes in Greater London, according to the broker’s estimates.

The slump is hurting developers, with sales of London homes under construction dropping 34 per cent in the second quarter. The number of residences sold before completion fell to about 4,600 from 6,974 a year earlier, according to data compiled by the researcher Molior London seen by Bloomberg News. Molior declined to comment.

The 10-member Bloomberg UK Homebuilder Index fell as much as 1.3 per cent in London trading. The index is down about 22 per cent this year. Redrow led declines falling as much as 2.6 per cent.

There was a 3 percentage-point increase in the stamp-duty sales tax for landlords and second-home owners in April, which followed an increase in charges for all luxury-home purchasers in 2014. For owner occupiers, that hike means that a 12 per cent tax rate is paid on portions above £1.5 million.

business@thenational.ae

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Published: September 14, 2016 04:00 AM

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