There’s plenty of evidence that London housing is in a rut, but the market is now facing a number of additional headwinds, including the prospect of higher taxes and a warning from the Bank of England that UK house values could fall as much as 30% in the event of a disorderly exit from the EU.
There are a number of overlooked cracks that suggest the London market may be in worse shape than many realise.
First, property flippers are being burned by the slowdown in demand for shiny new apartments.
In some cases, homes in towers that are nearing completion are being sold on for as much as 25% less than the value at which they were reserved, according to broker MyLondonHome.
Shares in UK homebuilders have continued to fall. Crest Nicholson led the losses, falling as much as 4.2% yesterday.
Taylor Wimpey, Barratt Developments, and Berkeley Group also fell more than 3%.
Even though everyone knows London house sales are falling, one measure, buried deep in a report by the Royal Institution of Chartered Surveyors, suggest they’re now at a record low.
Each real estate office is selling an average of just eight houses every three months even as brokers including Foxtons shutter some outlets to cut costs.
The number of completed properties that have yet to find a buyer has surged by almost half this year and now stands at a record, according to data compiled by Molior London.
In central London, new-house sales are on track to fall about 25% this year, the researcher said.
That’s prompting housebuilders to diversify.
The new-house market faces another knock next year as the government considers an additional stamp-duty tax for overseas buyers of houses in England and Wales.
Demand from Asia has already waned following a succession of tax rises, so developers are offering more incentives to purchasers, including Black Friday discounts of up to €56,225 to get deals done
Housebuilders are also circumnavigating the globe to find buyers.
Berkeley sent sales reps to Saudi Arabia this year as it widens the net of potential buyers from more historical markets like Hong Kong and Singapore.