London residential property prices are being cut as Brexit uncertainty looms, according to UBS
The London housing market is being pummelled due to stretched affordability, numerous changes to stamp duty, and Brexit uncertainty, according to UBS.
The Swiss investment bank published the third edition of its “London residential monitor” note, based on analysis of over 100,000 listings on residential property websites, on Wednesday. The analysis found that London sellers are increasingly being forced to cut their asking prices as properties sit on the market for longer.
Price reductions and levels of discount have continued to worsen across almost all central London boroughs, with the share of properties in the capital listed at a reduced rate now at 39%. That is an increase from less than 20% in 2016.
UBS’s data shows that a clear trend is that more expensive properties are taking the longest to sell and are offering the biggest discounts. In particular, the average number of days Kensington & Chelsea properties sit on market has increased and average price listings are now over 4% lower than historic averages in the borough.
Kensington & Chelsea properties have the highest average asking prices in London and listings in the area now spend the longest time on the market. However, Outer London boroughs, especially North East, have also seen a jump in the number of properties reduced, while South West remains the weakest.
UBS analyst Osmaan Malik and his team wrote that the London housing market remains weak. Stretched affordability, high levels of supply at prime price points and numerous changes to stamp duty have all taken their toll at a time when Brexit uncertainties linger.
They said that in past cycles, a London downturn has preempted a wider loss of momentum and decline in consumer confidence. The Bank of England appears to think this time may be different, as the capital is more exposed than the national market to stamp duty changes and is more likely to be impacted by the departure of European Union nationals.
Uncertainty surrounding the Brexit deal has weighed heavily on the real estate industry since 2016, with land values in prime central London tanking by almost 20%, according to recent data from estate agency Knight Frank.
Economists believe house price growth across the UK will be slow in the upcoming year, with Britain’s official exit from the EU widely being considered the most important influencing factor on property prices across the county.