Property Expert Says Brexit Effect Means Buyers And Sellers Are Holding Fire

Property experts from legal advisory service Irwin Mitchell Private Wealth say there are indications that the demand for luxury property in London is strengthening despite the market slowing as a result of uncertainty surrounding the EU referendum.

Figures released by estate agent Knight Frank earlier this month revealed that the ‘Brexit’ vote on June 23rd was prompting buyers and sellers to postpone decisions until after the referendum.

In May, annual house price growth slowed to the lowest rate since October 2009, 0.1% in prime central London, which stretches from Notting Hill to Islington and the City.

Prices in Knightsbridge dropped by 7.5% in the year to May, and property values in nearby South Kensington and Chelsea were down 4.6% and 3.5% respectively.

Several areas remained the same and prices in Islington rose 7.4%.

The ratio of active buyers per available property dropped by over half from 10 down to 4.8, over the past 12 months as buyers and sellers of expensive properties are put off taking decisions until the outcome of the vote is known.

Property expert and Partner at law firm Irwin Mitchell Private Wealth, Garrath Reayer said that despite the deceleration of the market there were signs that underlying demand is growing as viewings increased by 31% between January and April from a year earlier.

Expert Opinion

“The impending EU referendum has certainly put the brakes on the prime central London property market. Uncertainty creates nervousness and therefore both buyers and sellers are holding fire until the outcome of the vote is known.

“The Brexit effect means demand is subdued even where asking prices have fallen. Two stamp duty increases within the last 18 months have already had an adverse impact on this specific market.

“However, there are indications that underlying demand is strengthening, as asking prices are being reduced to reflect higher transaction costs.

“High levels of viewings would also suggest that buyers are keen to make purchases but are just holding fire until they know what the future of Britain’s place within the EU will be.” Garrath Reayer - Partner