The Strategist

Luxury real estate in London is losing value


09/21/2016 - 15:19



At the end of this year, prices for real estate in London will fall by 9%. The main reason for this is the uncertainty about Brexit and its consequences.



At the same time, Savills previously forecasted growth of prices for luxury London property by 21.5% during the five years to 2020. After the Brexit refendum, the growth forecast was revised downwards to 3.2%.

According to Savills analysts, in the near future developers will try to put into operation real estate as slowly as possible to avoid the risk of excess supply, as it will adversely affect and already low prices.

Owners of luxury homes have already been shocked by the fact that in April, the British government raised duties on the sales tax by 15% for those who own more than one house. Now, potential buyers of real estate will wait the outcome of negotiations on exit of Britain from the EU to assess economic impact in general.

It is worth noting that not only London, but all UK property market suffered from Brexit and related uncertainty. For example, volume of mortgage lending in the UK by the end of July decreased by 12% compared to the same period last year.

In July, the UK house prices fell by 1.1%, in August - by 0.2%. For the three months through August, prices rose by 0.7%, which is the slowest quarterly growth rate since 2014. Compared with the same period a year earlier, prices rose on average by 4.1% to 21.393 thousand pounds sterling, despite the fact that the annual rate of price growth slowed down to lows of 2013 during last three months.

It came to such a point that real estate property in the most fashionable areas of London was sold at a deep discount to get rid of the assets. So, after news about outcome of the British referendum, the Norwegian fund snatched up retail and office property sold at 124 million pounds by Aberdeen U.K. Property Fund.

Chief Executive Officer of Norges Bank Real Estate Management Karsten Kallevig said that the deal was probably one of the fastest, ever concluded by the bank. The fund received a significant discount because the seller had liquidity problems.

source: theguardian.com




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