Thousands of London homes have had their prices slashed since the Brexit vote a week ago amid warnings of a slump in the stunned housing market, the Standard reveals today.
An Evening Standard analysis has found a huge spike in nervous home owners cutting their asking prices after the surprise result of the referendum last Friday morning unleashed what was described as “a perfect storm” by one leading investor.
The impact is expected to be most severe in the new luxury development along the river from Vauxhall to Docklands where falls of as much as 40 per cent are feared.
One central London branch manager at one of the capital’s biggest firms said: ”The whole thing is a disaster. The uncertainty will cause the markets to crumble and who knows when that is going to get better.
“There’s no end to how far prices could fall. If you are a vendor and you want to sell a property then the writing’s on the wall - you are going to have to sell at a much lower level.”
How prices have plunged
Buckland Crescent, Belsize Park, NW3
The three-bedroom first floor apartment in a “beautiful period property” is a short walk from Swiss Cottage Tube station. Went on the market last May at £1.5 million. Price cut to £1.05 million last Friday.
Commercial Street, Whitechapel, E1
Two-bedroom flat is in a new development at 1 Commercial Street. It has fitted wardrobes and under-floor heating. First listed at £1.1 million in January. Price cut to £720,000 last Friday.
Aldridge Road Villas, Notting Hill W11
Two-bedroom upper maisonette in period building. The top floor is an open plan kitchen/reception room. Went on the market at £1.59 million in February. Reduced to £1.35 million on Tuesday.
Rosedene Avenue, Streatham, SW16
Five-bedroom house has off-street parking, large kitchen/dining room, four reception rooms and a large back garden. First for sale at £1.3 million last June. Price cut to £850,000 on Wednesday.
The analysis of the 13,000 homes listed on the Zoopla website currently listed as “reduced” suggest that around one in six have had their price cut since the dramatic Leave campaign victory last Friday.
Big reductions in asking prices seen this week include a two bedroom flat on one of Notting Hill’s most exclusive streets, which was cut by 15 per cent from £1.595 million to £1.35 million.
Another owner slashed the price for a flat in Chelsea from £3.35 million to £2.95 million yesterday.
Buying agent Henry Pryor said: ”This is a very, very different market to a week ago. I’m now trying to do deals 10 per cent below where they were a week ago and central London is already down 10 to 15 per cent from its peak.
“I do not believe that a whole load of foreigners are going to come to the rescue of trhe market having seen the currency change.
"I have three buyers, two from Italy and one from Brazil, who are really worried about the welcome they are going to get when they touch down at Heathrow.
"They have seen some of the images of racism since the vote and they are saying ‘is this the Britain we want to buy into?”
Agents said the political and economic uncertainty that has engulfed Britain since the vote has also triggered a surge in offers being withdrawn, leading to a possible return of “gazundering” for the first time since the 2008 financial crisis.
Hundreds of agreed deals are thought to have fallen through in the aftermath of the Brexit vote.
The Russian buyer of a six bedroom flat in Kensington withdrew a £6.95 million agreed offer last Friday.
The apartment is now back on the market at £6.75 million, having been originally marketed at £8 million last October.
Developers are also reassessing their exposure to the London market. One said: “People are deciding whether to proceed with schemes, they are putting sub-contractors on hold. If delivery slows you have to wonder how that will affect Sadiq Khan’s promises on housing during the election.”
One senior property figure said big price cuts on schemes that are going ahead were inevitable: ”The developers will come back at the end of the summer and look at their prices and they will say ‘if we were asking £450k for a studio pre-Brexit, let’s trim it down to £380.’”
Edward Heaton, founder & managing director of property buying and search agent Heaton & Partners, said: “The biggest effect is to likely be on new developments in London, in particular areas like Nine Elms, where there is a massive oversupply of high value flats, which there simply aren’t the end-users for at the moment.
"There is likely to be some drop in prices, although how much remains to be seen. One banker I have spoken to suggests the fall could be as much as 40 per cent.”
Stuart Law, chief executive of investment company Assetz Property, said “We still expect prime London prices to continue falling and many of the tens of thousands of luxury homes in the pipeline to be mothballed as demand from all over the world fails to meet that potential level of supply.
"The rest of London will definitely be hit by a perfect storm of several factors hitting house prices which is great news for house-buyers but not for investors and homeowners.
“We know that the City is going to relocate large numbers of highly paid bankers to Paris, Dublin and the rest of Europe and the loss of these highly paid house buyers and renters can only have a negative effect.”
Louisa Brodie, head of search & acquisitions at Banda Property, said: “Finally sellers are accepting they need to absorb higher buying costs and stop holding out for prices last seen 12 months ago.
"I expect to see more price reductions over the coming weeks and months, which will undoubtedly drive up transaction levels.”
The vote to leave and the turmoil that has followed is the latest in long series of setbacks for the central London property market that have included stamp duty hikes, changes to the tax treatment to buy to let investments and extra charges on some foreign investors.
Latest figures today from agents Savills show that prices in central London’s most exclusive neighbourhoods are already 8 per cent down on their peaks in the third quarter of 2014.