Brexit vote, taxes dampen London house prices

LONDON • House prices in Britain continued to climb this month, with only the capital experiencing a decline ahead of this week's referendum on European Union (EU) membership.

Asking prices increased 0.8 per cent to an average £310,500 (S$611,000), property website operator Rightmove said in report published yesterday. In London, they fell by 0.2 per cent, hit by the effects of a new property-tax regime and the upcoming EU vote.

The report adds to evidence that tax increases introduced to help first-time buyers compete with landlords for homes are subduing prices in the capital, where values have risen much faster than the national average since 2010.

A vote to leave the EU on June 23 will also hit London more than elsewhere, as it is the preferred area for international buyers.

"Markets typically dislike uncertainty, and London's fall in prices seems to be in line with what one would expect," said Rightmove director Miles Shipside. "Buyer momentum has been lost, and even those with access to considerable funds are still being deterred. This is also due to the tax regime."

The average time to buy property is now at a record-low 57 days. House prices are 5.5 per cent higher this month than a year earlier.

Referendum-related uncertainty is nonetheless leading to fewer new sellers coming to market, with June's numbers 5.3 per cent below the monthly average for this time of the year.

Said Mr Shipside: "You naturally might hesitate before putting your property on the market just a few weeks before you know the vote outcome.

"A vote to remain should mean that the housing market quickly returns to its previous norm, but a vote to leave would create political and economic uncertainties, which historically have had more serious repercussions."

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A version of this article appeared in the print edition of The Straits Times on June 21, 2016, with the headline 'Brexit vote, taxes dampen London house prices'. Print Edition | Subscribe