London Home Sellers Offer Ever-Growing Discounts

(Bloomberg) -- London homebuyers are getting the biggest discounts in at least six years, according to data from Zoopla.

The average reduction on a home in 13 inner London boroughs jumped to 7.6% in the first quarter, up from 7% a year earlier, the property-search website said in a report Wednesday. The residential real estate market in the U.K. capital has been stung in recent years by the introduction of new taxes and the uncertainty surrounding Brexit.

“There is more realism coming through from sellers, over time people have had to reduce asking prices,” said Richard Donnell, Zoopla’s research director. “The London housing market is going through a repricing process after a prolonged period of rapid price gains.”

While buyers in many markets often expect discounts, the practice has recently hit top cities like London, New York and Hong Kong. The trend is a stark reversal from the peak of London’s real estate market in 2014 when many buyers paid a premium on the asking price for a home.

There are signs in some areas that the price cuts are starting to ease. In April, more than half of the London neighborhoods tracked by Zoopla saw a decrease in the percentage of listings with a reduced asking price, compared with a year earlier.

In Kensington and Chelsea, for example, the share of properties offered at a discount was little changed last month from a year earlier. That compares with a more than 5% year-on-year increase in April 2018.

Sellers are digging in their heels as they see a faint light at the end of the tunnel of Brexit uncertainty, according to Nathalie Hirst, a buying agent focused on prime central London.

“Vendors are thinking, ‘I’m sticking at my price even if takes me two years to sell,’” Hirst said. “Buyers are coming into the marketplace and anything that’s good isn’t getting a discount.”

©2019 Bloomberg L.P.