London property loses attraction to Europeans following Brexit vote
06-06-2017
Continentals no longer largest group of overseas buyers in Chelsea and Kensington
by: Judith Evans, Property Correspondent
Buyers from continental Europe have largely deserted the housing market in London’s most exclusive areas since the Brexit vote. Europeans ceased to be the largest group of overseas buyers in districts such as Chelsea and Kensington, areas that draw large numbers of international homeowners, for the first time in the first quarter of 2017. They made up just 8 per cent of buyers in prime central London during the first three months of the year, steadily dwindling from 28 per cent in the second quarter of 2016 — just before the EU referendum — according to data from Hamptons International, an estate agency that is part of the Countrywide group. The fall in European interest comes as the total number of homes changing hands in the prime central London market has also been shrinking. “We’ve had many years of seeing hordes of French people moving here, Italians wanting their pied-à-terre here, and so on. That has changed pretty dramatically,” said Roarie Scarisbrick, a partner at the property buying agency Property Vision.
“We are still seeing some French, Italians and Germans buying here but it is a significantly reduced pool of buyers. Those that are buying really need to buy something — they have practical reasons.” Fionnuala Earley, residential research director at Hamptons, said some buyers may have brought purchases forward early in 2016 to take advantage of favourable exchange rates as the pound dipped against the euro.“There may be some backlash after that — but also there is a lot of uncertainty in Britain at the moment and in the prime central London market,” she said. “We may see more activity when things are more settled with Brexit and that may affect [buyers from] the EU more than elsewhere.”
There was also a bounce in European buyers selling up last year: they reached 37 per cent of all sellers in the third quarter, before receding to 11 per cent. The numbers include Europeans resident in London as well as those with investment properties or homes for part-time use.In the first quarter of 2017 European buyers were supplanted as the largest overseas group by Middle Eastern purchasers, who have returned to the market thanks to a recovery in oil prices, plus the weakness of sterling against the dollar and dollar-linked currencies in the aftermath of the EU referendum last June. Buyers from the Middle East made up one in 10 homebuyers in prime central London in the first quarter. Russians have also begun returning to the market after an absence that analysts said was down to the weak rouble, international sanctions and low oil prices.
However, the market in high-end London homes overall remains weak. It has been affected by falling prices over the past three years, partly thanks to a series of changes to stamp duty following a period of rampant price growth. Prices in prime central London have dropped 12.5 per cent since their mid-2014 peak, according to Savills. Ms Earley said the total number of homes changing hands there was down by about one-third from a year ago. Mr Scarisbrick said uncertainty in the market meant that “the discretionary buyers have gone — you are left with this hard core of people who have a need to buy, people who are actually living here. “Some of the more bullish agents were predicting a stampede of opportunistic euro-denominated investors, but while the currency may be in their favour at the moment, there are all sorts of other deterrents out there to stop them from investing unless they absolutely have to.”
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