LONDON • Brokers have been quick to blame the uncertainty around Brexit for the downturn in London property prices, but beneath the surface, there are a number of factors suggesting declines may be inevitable no matter the outcome.
Home values in the city have finally turned negative, according to a Bloomberg analysis of Land Registry data. According to one metric, sales are at a record low.
Here are eight other things to look at, underscoring the view that the capital's property market is heading for trouble.
LUXURY REBOUND MYTH
Estate agents have been predicting the recovery of the prime central London market for years, pointing to an uptick in viewings as proof of demand.
However, the picture may be drastically different on the ground, as seen with London Central Residential Recovery Fund, a property fund that owns a portfolio of rental homes in the city's most expensive districts.
Sales are at their 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.
The fund, which is coming to the end of its eight-year duration, urged shareholders to vote against winding down the portfolio, saying that it expects offers of about 17.5 per cent below March valuation levels if it were to sell its properties now.
That could be a "conservative estimate" if buyers were to perceive the fund as a distressed vendor because it was being liquidated, said the filing. Investors heeded the warning and voted earlier this month against closing down the fund.
"In recent weeks, viewings are up," Ms Naomi Heaton, chief executive of London Central Portfolio, which manages the fund, said in an interview. "There are many more buyers and we're seeing competitive bidding at a level not seen in many years."
The fund's net asset value has risen about 72 per cent since 2010, Ms Heaton said.
OFF-PLAN SALES SLOWDOWN
The days of home buyers queueing to snap up homes before they are even built appear over, after increases in taxes dampened overseas demand.
Telford Homes said it was "disappointed" with the British and overseas launch of its Gallions Point project after securing just 15 sales for the 127-home project near London City Airport.
The wider London market is seeing a "marked slowdown in volumes and downward pressure on price", according to Crest Nicholson.
London's stock of completed but unsold homes has surged by almost half this year, according to researcher Molior London.
Demand for London homes, both rentals and owned, has been boosted by immigration from the European Union.
If net immigration slows after the Brexit vote, demand could fall, those leaving could contribute to an increase in supply by selling their homes, and landlords could opt to offload properties amid weaker demand from tenants.
Home values rose more in hipster-favourite Hackney in east London than in any other local borough in Britain over the past 20 years, said the Evening Standard earlier this year, citing a report by broker Cushman & Wakefield.
Many of those who moved there work in the technology 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.
The Chinese developer, together with CC Land Holdings, had earlier partnered to replace Mr Wang's Dalian Wanda Group as the buyers of the adjacent 4ha Nine Elms Square land.
Next up? Lodha Developers is looking to raise about £472 million (S$820 million) by selling its stakes in projects in Lincoln Square and the former Canadian diplomatic premises in Mayfair's Grosvenor Square.
Sellers who put homes on the market are facing the lowest chances of securing a sale in 10 years.
Construction activity in London has fallen a little in recent months, particularly in residential development, Telford Homes chief executive Jon Di-Stefano said in a filing last month. Crest Nicholson told investors there is "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.
Even estate agents are finding it hard to make money these days.
Online brokers Emoov and units of Tepilo Holdings went into administration earlier this month.
This came just months after Emoov acquired Tepilo, and subsequent attempts to find a buyer for the combined business had not been successful, according to a Dec 3 statement.
Other estate agents have also faced difficulties in recent years. Countrywide sold shares at a discount of almost 80 per cent to shore up its balance sheet in August, while Foxtons Group's share price has dropped almost 90 per cent in less than five years.