London's Super-Prime Housing Slump Spreads to Luxury Properties

(Bloomberg) -- A slump in super-prime home s in London is rippling down the luxury-property market.

Sales s per square foot for houses priced between 2 million pounds ($2.6 million) and 5 million pounds fell by 8.4 percent in the second quarter from a year earlier as political uncertainly deterred potential buyers, according to data compiled by researcher Lonres. Selling prices for super-prime properties -- those over 5 million pounds -- fell 3.2 percent.

“The very top end fell first and hardest on higher stamp-duty charges and the Brexit vote,” Marcus Dixon, head of research and data analysis, said in a telephone interview. “Now, with further political uncertainty, we are starting to see falls filter down into prime central London’s lower price bands.”

Sales-tax increases and the U.K.’s decision to leave the European Union roiled London’s high-end luxury-property market last year. A bid by Prime Minister Theresa May to strengthen her hand in EU negotiations backfired last month and cost her a parliamentary majority following a snap election, adding to uncertainty facing buyers at the lower end of the luxury-homes market.

“There is a lack of urgency in the market which, combined with considerable buying costs, means many who would have transacted have stayed in their current properties instead,” Dixon said. While sales across the prime central London market are similar to 2016, they’re down 40 percent from three years ago, he said.

Savills Plc expects prime central London property s to stagnate this year and next before increasing by 8 percent in 2019. Values fell 2.1 percent in the first half and are down 14.4 percent from their 2014 peak, according to the firm’s estimates.