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Foreign Buyers Could Flood Back into London’s Luxury Housing Market on Brexit Yes Vote

If sterling slides in the aftermath of a yes vote, dollar-backed buyers could benefit

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London’s high-end housing market has been described as a “ghost town” by some brokers in the U.K.

Christopher Furlong / Getty Images
London’s high-end housing market has been described as a “ghost town” by some brokers in the U.K.
Christopher Furlong / Getty Images

Wealthy foreign buyers are positioning themselves to scoop up bargains in London’s luxury housing market if Britain votes to leave the European Union later this month.

London’s high-end housing market has been described as a “ghost town” by some brokers in the U.K. capital as wealthy overseas investors sit on their hands until after the referendum takes place on June 23. Some are even renting instead of buying until the decision has been made.

However, some brokers predict that dollar-backed buyers could flood back into the market if sterling slides in the event that Britons vote in favor of a so-called Brexit, making properties much cheaper for them.

“No one is going to make any decisions before June 23. The phones aren’t ringing. The market has been slowing down a lot, leaving the center of Mayfair like a desert town. No one is there,” says Trevor Abrahmsohn, managing director of Glentree International, a London-based brokerage.

“New developments in the center of London are like ghost towns. Some people have closed their show apartments, especially in east London because people weren’t turning up.”

Abrahmsohn has predicted that prices in some of the most exclusive parts of London such as Mayfair could become 50% cheaper for dollar-backed buyers from the U.S., Iran, Russia and the Middle East among others than during their peak in 2014.

More:A Brexit Yes Vote Could Hit Housebuilding in U.K.

This chimed with comments from Peter Wetherell, chief executive of Wetherell, a Mayfair-based brokerage, who has seen the proportion of high-end property sales to overseas buyers slide from 40% in recent years to 25%.

He believes that if the sterling’s position adjusts dramatically, making London property good value for money for some overseas buyers, there may be an uplift in buyers coming into London from South America, Asia and Africa.

Fionnuala Earley, residential research director at Hamptons International, a U.K.-based real estate firm, added: “If the U.K. does leave the E.U., most economists expect sterling to dip. While that’s not good for interest rates or for imported inflation, it would make London property relatively cheaper for overseas buyers. And London will always have prestige as one of the top global cities.”

This followed a report by Knight Frank, the global real estate consultancy, which showed earlier this week that the the ratio of active buyers per available property in prime central London has fallen to 4.8 from 10 over the last year.

More:Ahead of Brexit Vote, Potential Buyers Hold off Snapping up London Luxury Homes

Knight Frank believes that there has been a discernible “Brexit effect” on the U.K. economy as buyers and sellers are postponing decisions because of the prospect of entering unchartered economic and political territory.

"The referendum has created uncertainty in the prime London residential property market. Due to increased taxation and regulation, and uncertainty over Brexit there has been a near 50% drop in the number of sales in the residential market in Mayfair and the West End compared to 2014,” says Wetherell.