London luxury-property values dropped in run-up to Brexit vote

Visitors looking at the London skyline from the Royal Observatory in Greenwich, London, on June 28, 2016.
Visitors looking at the London skyline from the Royal Observatory in Greenwich, London, on June 28, 2016. PHOTO: AFP

LONDON (BLOOMBERG) - Home values in London's best districts fell for the fourth straight quarter because of uncertainty surrounding the outcome of the vote on whether Britain should leave the European Union, according to broker Savills.

Properties in neighbourhoods defined as prime central London dropped 1.4 per cent in the three months through June, Savills said in a statement on Friday. Values are down 8 per cent from their peak in the third quarter of 2014, the company said. The survey was based on data collected during the week before the June 23 referendum.

The United Kingdom's decision to quit the EU, which led to a weakening of the pound, has prompted some overseas buyers to re-enter London's luxury-property market, according to Lucian Cook, the broker's head of residential research.

"There has also been a fair share of speculative bids from those hoping to secure a bargain," Mr Cook said. "Against this context, sellers have generally taken a pragmatic approach around pricing without having to slash their expectations."

Home sales this year have been hurt by the introduction of higher levies for buy-to-let landlords and a 2014 increase in stamp-duty sales tax for the most expensive properties.

The fact that there are conflicting signals means that the impact of Brexit won't be clear until later in the year, Mr Cook said.