London Property Stalls as Brexit Turns Sellers into Landlordsby
14 percent of homes withdrawn from sale now offered as rentals
Some home owners opting to rent rather than accept price cuts
Gary Waller, a 41-year-old accountant, expected to negotiate a lower price on an apartment he wanted to purchase in London’s Putney district following the U.K.’s vote to leave the European Union. Instead, the vendor took the property off the market.
Home sales in the capital in the first seven months of 2016 were at their lowest level since 2012 as owners delayed offering properties for sale or chose to lease them rather than accept lower offers amid fears over the impact of the Brexit vote. Almost 54,900 residences were sold in London in the seven months through July, an analysis of preliminary Land Registry data shows.
“I offered a 10 percent discount to the asking price of 470,000 pounds ($611,235), given prices are bound to fall going forward and the seller pulled out straight away and hasn’t re-listed the flat,” Waller said, “I’ve been looking for similar properties instead, but there are so few on the market right now.”
London home values may face “substantial” declines if the Brexit vote triggers an extended period of economic weakness, according to a report by UBS Group AG’s wealth management unit. Values in the U.K. capital will drop by 1.25 percent next year because of uncertainty surrounding the terms of Britain’s exit from the EU, according to Countrywide Plc, the nation’s largest real estate broker. Sales in July were the lowest for that month since 2000, the Land Registry data shows.
“We have seen a lot of vendors opt to rent instead of sell because of all the turmoil caused by the vote,” said Fionnuala Earley, residential research director at Hamptons International. In the past 60 days, 14 percent of all homes withdrawn from the market in London were subsequently offered as rentals compared with 11 percent in the same period last year, according to data compiled by the broker.
Waller, meanwhile, has put his search on hold. He said he will resume his search when the outlook for the property market becomes clearer and vendors accept they need to reduce asking prices.
If and when that happens, potential buyers like Waller will be hoping that it helps reverse a long-term trend towards higher prices.