London luxury home values fall 6.8% in year since Brexit vote

The development of One Hyde Park in London on May 2, 2014.
The development of One Hyde Park in London on May 2, 2014. PHOTO: REUTERS

LONDON (BLOOMBERG) - A nascent recovery in London's luxury-home market has faded as political and economic uncertainty prompt bankers and financial workers to postpone purchases.

Average prices in prime central London fell 1.3 per cent in the three months through June, leaving them 6.8 per cent lower than a year ago, when the United Kingdom voted to leave the European Union, according to data compiled by broker Savills. Prices for the city's most expensive districts are now 14.4 per cent below their 2014 peak, the Savills data show.

Tax hikes on luxury property, coupled with increased charges on second-home purchases, have damped demand for homes in London's most expensive neighbourhoods. This came as developers planned a record number of pricey apartments on the edges of central London, which together with the uncertainty caused by the Brexit vote have prompted widespread price declines.

"Ahead of the vote to leave the EU, there were signs of a market bottoming" following the December 2014 tax hikes, Lucian Cook, head of residential research at the broker, said in an emailed statement. "But increased political and economic uncertainty has weakened fragile buyer sentiment."

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Districts with a high proportion of buyers working in finance, including Kensington, Notting Hill and Canary Wharf, have all recorded price declines, the Savills research showed. Average prices for all prime London homes, which includes districts from Ealing and Hampstead to Canary Wharf and Wimbledon, fell 0.9 per cent in the second quarter and are down 5.5 per cent compared with a year earlier.