Brexit Gives London Homebuyers Biggest Discount in a Decade

(Bloomberg) --

Homebuyers took advantage of Brexit uncertainty to get steep discounts in London’s fanciest neighborhoods in the first quarter.

Prices for homes under 2 million pounds ($2.6 million) in the capital’s most sought-after districts fell the most in a decade in the three months through March as politicians failed to agree on a deal for the U.K.’s orderly withdrawal from the European Union. Transaction volumes rose sharply as more purchasers piled into the market to take advantage of the potential for reductions, according to data from LonRes.

“People started to realize there were some good deals to be had while Brexit uncertainty rumbled on,” Marcus Dixon, head of research at LonRes, said in an interview. “If sellers start to feel nervous about what’s happening, they’re going to be more open to accepting lower offers.”

Buyers got an average 13.4 percent discount on properties in the area known as prime central London, according to LonRes. Overall, just under half of sellers cut the price of their properties before finding a buyer, according to the data provider.

London’s priciest homes -- those d at more than 5 million pounds -- saw a similar effect. The increase to sales tax on property deals, higher taxes for second-home owners and a surplus of stock have all hurt the luxury market in recent years.

Properties over 5 million pounds saw prices decrease 6.6 percent and sales rise 3 percent in the period year on year, the first gain in more than a year, the data show.

Basic rules of supply and demand may limit how long the good deals last, Dixon said. Even as sales ticked up, there was a 39 percent year-on-year decrease in the number of new prime central London homes put on the market in the first quarter, according to LonRes.

©2019 Bloomberg L.P.