London voted against Brexit, most probably because those who live there understood how bad splitting from the European Union would be for the city. Now, it seems that house prices are becoming one of the casualties of the split, as they rapidly decrease. The housing market in the city started to drop as soon as the referendum results were announced and they do not show any signs of picking up in the near future. Indeed, many estate agents predict that prices will continue to fall, painting a bleak image of the housing market in London and through the South-East of the country.
A recent survey by the Royal Institution of Chartered Surveyors (RICS) backs up concerns about the effect that Brexit is having on the housing market. It shows that both supply and demand for housing in the capital had declined following the announcement and subsequent political fall out of our departure from the European Union. This is affecting house prices throughout the nation but it is believed that areas outside of the capital will recover quickly. London, it seems will still have to languish in its pricing woes for a long while yet. It seems the housing market crash is here to stay for a while, leaving Londoners in a dire situation.
Many predict that house prices will do better once Brexit is done and dusted. They believe that once we are finally able to make the split happen that house prices will recover naturally. Experts think that it is the uncertainty that is causing the slow down in the property market in the city. With the political impasse as troublesome as it is, however, the question has to be asked, is there actually any way out? Theresa May struggled to get her deal through the House of Commons after failing to gather enough parliamentary support. Will her successor really have any more luck? They seem to believe that they can negotiate a new deal but will the European Union really play ball? With so much opposition to no-deal, both throughout the country and among MPs too, how long will it be before we can actually make the split happen?
The last time that the London property market faced such a slump was back in 2009, following the crash in the banking sector. In the first three months of 2019 alone the market declined by 3.8% when compared to the figures for the same months in 2018. With average house prices in the city now standing at around £455,594 as declared by the Nationwide House Price Index, properties prices have taken a serious tumble. Robert Garner, Nationwide Bank’s Chief Executive has also added to the doom and gloom surrounding the housing market crisis. He said back in March that he believed that the housing market was relatively stable but that he was becoming increasingly concerned by the decrease in new enquiries from those interested in buying a property. It seems that these are at their lowest rate since 2008, which really does not bode well for any potential recovery in the sector.
A comparison between the decreases in London with those from around the rest of the nation, which stand at just 0.7% during the same time period demonstrates just how much the city is paying the price for Brexit. Indeed, Northern Ireland, Wales and Scotland actually enjoyed house price increases. London, it seems is becoming something of a scapegoat in the name of Brexit when it comes to falling property prices. Only 9 out of the 33 local authority areas have escaped declining property rates. In Hackney alone, prices dropped by 8.7%, whilst in Harrow prices went down 6%. The biggest slump, however, comes from the centre of London in Westminster. This area saw a total decrease of 19.6% with average house prices decreasing from £1,117,408 to £898,127. It is worth noting, however, that houses in this part of the city usually sell for huge amounts so, one or two fewer sales could drastically affect the statistics.
London is also home to the most high-end housing in the country and this market is also taking a tumble too. Prime properties are staying on the market longer, causing many sellers to drastically reduce prices in order to secure sales. Coutts Real Estate Investment Service has issued advice that shows that the average buyer is enjoying a reduction of 13% on the asking price when they purchase a property. When the property prices go over the £10 million range the discount increases to 21%. It does seem that the first few months in 2019 saw an increase in property prices in the prime market, by about 0.4%. Although compared to the increase that occurred during the same period in 2018, they actually dropped by 3% and 17%, when compared to prices, gained 5 years ago. Brexit, it seems is really leaving its mark on the capital’s housing. It will be interesting to see what happens once the new Prime Minister takes over.
