The growing uncertainty around the outcome of the long-drawn-out Brexit talks has made buyers wary of the housing market’s future in the capital. With stamp duty rises and the removal of tax breaks for buy-to-let investors, the climate is firmly on the sell, and high prices have deterred buyers.
In this unusual situation for the formerly buoyant London housing market, many are preferring to wait and see for any indication of changes in the short and medium term, preferring to keep their hands in their pockets for now.
Meanwhile, international buyers, the traditional engine of price growth in the city, have now slowed down their investment after an initial enthusiasm for a weaker pound in the aftermath of the vote. The possibility of a no-deal Brexit keeps surfacing time and time again, and with little progress on the negotiations front, sellers are left fearing the worst: a decline in property prices.
On the flipside, local and international buyers, especially first-time buyers, are hedging their bets that prices will fall, while keeping an eye on the affordability of mortgages. The recent rise of the Bank of England’s interest rate has led to more expensive mortgages and there are talks of more hikes to come by 2020.
Sellers have realised that they are going to have to lower their prices to find buyers, with many having already taken hits of up to 10%. After a long period with a marked lack of properties coming to the market, it is now inundated with more properties than at any time since September 2015. As a result, sellers are having to cut overly optimistic asking prices, even in rather central areas such as Hammersmith and Fulham (-3.3%), Ealing (-3.4%) and Hackney (-3.5%). Such examples offer buyers hope that there will be continued drops across the capital.
This is good news for landlords that are looking at making the most of vacation rentals, homestays and shorter rents, as a weaker pound, and hopefully minimal visa requirements, will help to drive tourists to the city. For those who cannot sell their properties right now, this could be an unexpected boon.
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Why Brexit is killing the London housing market