There is now clear evidence that Brexit is hitting

London house prices

http://pacificenergyassociates.com/news/there-is-now-clear-evidence-that-brexit-is-hitting-

london-house-prices/

10th August 2016

London's property prices are beginning to slide because

the dampening effect of Brexit is beating the stimulus of low interest

rates.

The UK's vote to leave the European Union helped slice just over

£30,000 ($39,194) off the average London property price in July ,

according to a report from estate agent Haart cited in the Guardian.

The average price fell from £558,760 to £527,349 in London, the

largest month-on-month decline recorded by the company. Nationally

prices shrank by 0.9%.

The Bank of England last week cut interest rates in half to 0.25% in an

effort to reinforce the economy against any Brexit shock. Low interest

rates are generally seen as a way to help buoy up property prices but

the Brexit effect seems to be more powerful.

And it is not just the houses that are losing value, but also the land

earmarked to build them on.

In prime central London, average residential development land prices

fell for the third consecutive quarter, dropping by 6.9%, according to a

report by Knight Frank published on Wednesday. Average values are

down 9.4% on an annual basis, Knight Frank said, returning to 2014

levels.

There is no doubt that Brexit has had an effect on prices and

transaction volume. On Tuesday, property group Savills said earnings

on commercial transactions plunged 23% in six months to June 30, as

investors waited for the outcome of the June 23 referendum.

"In Central London, many of the hitherto significant buyers

(Sovereign Wealth, International Private Equity) elected to remain

largely on the sidelines during this period, which opened the way for

Private Wealth from areas such as the Middle East to transact," Savills

said.

Property prices are increasingly depending on the battle between

political uncertainty and low interest rates. The more political

uncertainty there is, the longer interest rates will stay low and the

easier it becomes to borrow money to buy a house. But high political

uncertainty also makes buying a house in London less appealing for

those who want to invest from abroad or for those looking for a second

property.

The effect on the economy is already starting to be felt. The number of

new available jobs in the the UK's financial centre fell 12% from June

to July to just under 8,000, according to a survey by Morgan

McKinley.

Last month the Royal Institute of Chartered Surveyors said that new

buyer enquiries "declined significantly" in June, with 36% more

chartered surveyors reporting a fall in interest as part of the June

housing survey.

That was the lowest reading since mid-2008 when the financial crisis

was in full swing.

And we're not even two months in.