London Housing Bubble Melts Down

But don’t just blame Brexit.
In Central London – the 30 most central postal codes and one of the most ludicrously expensive housing markets in the world – eager home sellers are slashing their asking prices to unload their properties. But even that isn’t working.
In the 12 days after the Brexit vote, cuts to asking prices have soared by 163% compared to the 12 days before the vote, according to the Financial Times. Yet sales have plunged 18% from before the Brexit vote. Sales had already taken a big beating before then and are now down a mind-boggling 43% from where they’d been a year ago!
So Brexit did it?
Um, well, sort of. But it’s more than Brexit. Home prices on a -per-square-foot basis had peaked in Q2 2014, according to real-estate data provider LonRes. Since then, the market in Central London has been hissing hot air. By Q1 2016, prices for homes above 5 million had dropped 8% from their 2014 peak, and prices for homes from 2 million to 5 million had plunged 10%.
Back in December 2015, we reported that luxury housing in London was getting mauled, based on the LonRes report for the third quarter, released at the time. It pointed the finger at folks who, once ‘awash with cash, don’t have as much to spend’ [read… It Gets Ugly in the Toniest Parts of London].
Then, in its spring review, LonRes called the prime London housing market ‘challenging.’

This post was published at Wolf Street by Wolf Richter ‘ July 18, 2016.