London Real Estate Continues Fall – Report

According to a new report by Knight Frank, London real estate growth has fallen more than half a percentage point over the past six months for the biggest decline since June 2009.

Prices fell by 0.1 percent in February compared to the previous month, and growth was slowest in neighborhoods with more expensive property, such as Westminster and the Royal Borough of Kensington and Chelsea. Like everywhere else, market volatility has potential buyers on edge, and the impending European Union referendum further complicates the market.

“Rising economic uncertainty due to the unknown implications of the upcoming EU vote is the key issue,” said Liam Bailey, head of residential research at Knight Frank. “This lack of clarity could lead to fewer residential transactions and could even weigh on development volumes.”

London calling
Prime central London markets such as the Westminster and Kensington and Chelsea boroughs have fallen by 0.8 percent over the last year, with asking prices falling by 5-10 percent. However, demand for best-in-class properties remains high, and eastern markets have performed well.

The drops continue a trend dating back to last year, when 12-month percentage changes were around 4 percent. With each successive month, however, rates fell, eventually dropping below 1 percent.

Every month since November, six-month, quarterly and monthly percentage changes have been negative. Overall, annual growth rates have been trending down since late 2011’s high of almost 12 percent, with an accelerated decrease since the third quarter of 2015 as buyers have adopted a wait-and-see approach in response to negative headlines in business papers and political strife.