London house prices suffer their biggest drop in 10 years as Brexit fears bite

Real Estate

House prices in London are falling at the fastest rate in a decade.

According to the Nationwide House Price index, prices over the first three months of 2019 in London dropped 3.8 percent in value, compared to the same period in 2018. The biggest drop since 2009.

The average house price in London during the first quarter of 2019 was £455,594 ($593,500), according to one of Britain’s biggest mortgage lenders.

The capital’s decline is the seventh consecutive quarter in which prices have fallen and Nationwide’s chief economist, Robert Gardner, blamed high prices and changes to buy-to-let rules.

Gardner said in a statement Friday that housing market activity across the United Kingdom was broadly stable but new buyer enquiries were continuing to fall, hitting “their lowest level since 2008.”

England recorded its first annual price fall since 2012, with prices down 0.7 percent when compared to the first quarter of last year. Scotland, Wales and Northern Ireland all enjoyed price gains.

A recent survey of U.K. residential property from the Royal Institution of Chartered Surveyors (RICS) concluded that Brexit is currently the main obstacle for market activity.

More than the three quarters of estate agents that were asked, said uncertainty over how the U.K. leaves the European Union was holding back both buyers and sellers of property.

Speaking to CNBC last week, RICS Chief Economist Simon Rubinsohn said that there was evidence that if Brexit could be resolved then the market would be reasonably well set.

“That doesn’t mean that prices will spike up, but it is visible in the responses that the degree of pessimism is measured,” said Rubinsohn.

Henry Pryor is a property buying agent at the luxury end of the scale who believes that buyers should take advantage of the current uncertainty to snap up deals. He told CNBC via phone that he was “shamelessly using Brexit” to spook sellers into taking offers.

Pryor said U.K. housing activity currently matched the yearly average he had recorded since 2005 of around 1.1 million house sales a year as sellers were still being triggered by the “three d’s” — debt, death and divorce.

He said property values would be sustained by the continued ability of buyers to borrow large sums of money.

“House prices in the U.K. are predicated on the cost and availability of credit. There is nothing in Brexit, whether we have a hard Brexit or soft Brexit, that will impact on either the availability of mortgage finance or the cost of mortgage finance.”

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