Brexit isn’t the only thing weighing on London property

Bloomberg

Brokers have been quick to blame the uncertainty around Brexit for downturn in London property values, but beneath the surface there’s a number of factors suggesting declines may be inevitable no matter what the outcome. Home price growth in the city has turned negative, according to a Bloomberg analysis of Land Registry data, months after analysts expected them to begin falling.
Here are other things to look at, underscoring that the capit-al’s property market is heading for trouble:

LUXURY REBOUND MYTH
Estate agents have been predicting recovery of prime central London market for years, pointing to an uptick in viewings as proof of demand. But the picture may be different on the ground, as seen with London Central Residential Recovery Fund Ltd, a property fund that owns a portfolio of rental homes in the city’s most expensive districts. Sales are at lowest level since records began and many properties that do come on the market are being treated as distressed, the manager told investors last month.

BIG DISCOUNTS
Mayfair, home to hedge funds and luxury retail stores, provides one example of the discounts on offer to purchasers in prime central London. Buying agent Black Brick says it acquired a home in the district for $19 million on behalf of a client after it was repossessed. The asking price had earlier been 25 million pounds.

OFFPLAN SALES SLOWDOWN
The days of homebuyers queuing to snap up homes before they’re even built appear over after increases in taxes damped overseas demand. Telford Homes Plc said it was “disappointed” with UK and overseas launch of its Gallions Point project after securing just 15 sales for 127-home project near London City Airport.

NET IMMIGRATION
Demand for London homes, both rentals and owned, has been boosted by immigration fr-om EU. If immigration slows after Brexit vote, demand could fall, those leaving could contribute to a rise in supply by selling their homes and landlords could opt to offload properties amid weaker demand from tenants.

TECH DOWNTURN
Home values rose more in Hackney in east London than in any other local borough in the UK over past 20 years, the Evening Standard reported earlier this year, citing a report by broker Cushman & Wakefield. Many of those who moved there work in the tech industry, whose huge growth has helped them get the deposit they need to purchase a home. This year is different — the drop in tech share prices in the second half means they will have less to spend than they thought.

BIG BUYERS TURN SELLERS
Some overseas investors who made a splash in the London market are selling out. When billionaire Wang Jianlin decided to sell one of the largest luxury
residential projects under development in London, his firm turned to a buyer it knew well: Guangzhou R&F Properties Co.

DOING DEALS?
Sellers who put homes on the market are facing lowest chances of securing a sale in 10 years.

CONSTRUCTION SLOWDOWN?
Construction activity in London has fallen a little in recent months, particularly in residential development, Jon Di-Stefano, Chief Executive Officer at Telford Homes, said in a filing last month. Crest Nicholson Plc told investors there’s “softness” in the building market and that it took advantage of a rise in the availability
of sub-contractors to lock up longer-duration contracts.

BROKER WOES
Even estate agents are finding it hard to make money these days. Online brokers Emoov Ltd and units of Tepilo Holdings Ltd went into administration earlier this month. It came just months after Emoov had acquired Tepilo, and subsequent attempts to find a buyer for the combined business had not been successful,
according to a statement.