London house market ‘grinding to a halt’ on Brexit

Sales of London homes under construction dropped 14% in the third quarter as uncertainty surrounding the terms of Britain’s exit from the EU hurt demand already dented by higher taxes.
London house market ‘grinding to a halt’ on Brexit

The number of residences sold before completion in the period fell to 4,830 units from 5,636 a year earlier, according to report by researcher Molior London.

London’s residential real estate market is grinding to a halt, with transactions falling 78% in the five months from April through August compared with the same period a year earlier, preliminary Land Registry data show.

Political and economic turmoil, with the pound dropping 18% since the June Brexit vote, is discouraging buyers affected by rising taxes.

The slide in the pound hasn’t sparked as much interest as expected from overseas investors, according to Faisal Durrani, head of research at broker Cluttons.

“There are still too many unknowns about where the market is going and many overseas buyers are waiting on the fence,” he said.

Shares in Berkeley Group, London’s biggest homebuilder, have fallen more than 25% since the vote.

A record 6,864 homes were completed during the third quarter, the most since data was first collected in 2009, the Molior report shows. Values in the capital will fall by 1.25% next year, the first decline since 2009, because of the turmoil caused by Brexit negotiations, according to Countrywide, the UK’s largest real estate broker.

There was a three percentage-point increase in the stamp-duty sales tax for landlords and second-home owners in April, which followed a rise in charges for all luxury-home buyers in 2014. That hike means a 12% tax rate is paid on portions above £1.5m (€1.66m).

The Royal Institution of Chartered Surveyors said its UK house-price gauge rose in August as an increasing number of agents reported appreciating prices. Values continued to fall in central London.

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