Free Fallin’: London Property Tumble Attracts Chinese Investors
[otw_shortcode_dropcap label=”L” font=”Bowlby One SC” color_class=”otw-black-text” background_color_class=”otw-no-background” size=”large” border_color_class=”otw-no-border-color”][/otw_shortcode_dropcap]ondon houses prices are down. I know, shocking right? Take a country out of the EU—and all the tax breaks that go along with it—have banks flee to Paris and elsewhere, and the housing market tanks.Quel suprise!
Here are the cold, hard facts: Real estate sales in prime Central London fell 42 percent after the Brexit vote. The number of home owners slashing prices jumped by 75 percent according to data compiled by researcher, Lonres. Compounding the bad news was a sales tax increase of as much as 15 percent for the costliest homes. Apart from that everything was great! Well, not really.
High-end London homes may not have hit rock bottom but they have dropped significantly from their previously exalted high. Values for homes in Chelsea and Knightsbridge declined almost nine percent and seven percent respectively from January through August, said broker Knight Frank LLP. For speculators and agents inacross the pond this has been the equivalent of losing a close family member.
“The real damage was already done over the past year, with stamp duty hikes—the ten weeks after June 23 was when sellers had to get real about pricing,” said Roarie Scarisbrick, a partner at Property Vision Ltd, a broker that advises prime-home buyers.
Getting real has been a bitter pill. Countrywide Plc, the country’s largest real estate broker, expects values for properties in prime central London to fall by six percent this year.
Unsurprisingly construction in the city has hit the brakes. Cranes and bulldozers lie as untouched as a pile of mortgage applications on a broker’s desk during the 2008 crash. New research by JLL has found the number of starts in Central London in the second quarter of 2016 was 65 percent lower than in the fourth quarter of 2015. This was the first drop in four years, reported the Daily Telegraph.
But, one man’s trash is another’s treasure. The woes befalling London real estate, along with a deflated pound, have meant Britain’s previously rarified market has been awash with foreign investors—keen to capitalize on the rush of blood by the Brexit voters.
Property inquiries by potential Chinese buyers in the weeks right after the June 23rd referendum were about 30 percent to 40 percent higher than the 2016 average, according to Morris.
But they are not “emotional buyers,” he noted in his emailed comments. “They are looking for a bargain, and they have long-term faith in the U.K.”
Which is a lot more than can be said for those who voted to leave their European brethren. Now let’s see if the U.K. government had the nerve to go through with it.
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