House prices in central London’s most expensive neighborhoods saw their biggest drop since the depths of the global downturn in 2009 in the wake of the Brexit decision.
Global real estate agency Knight Frank’s latest health check of London’s high-end housing market found that annual price growth declined to -1.8% in the year to August, the biggest drop since October 2009.
At 8.9%, the largest annual decline was in the tony Chelsea neighborhood, followed by Knightsbridge and South Kensington, which saw drops of 6.8% and 5.8% respectively.
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London’s high-end housing market has been struggling amid a double whammy of higher sales taxes, known as stamp duty, and Britain’s decision in June to leave the European Union.
However, Knight Frank believes there are grounds for "cautious optimism" that activity will intensify over the next few months as these two issues have pushed down prices, which should, in turn, entice more buyers.
In particular, dollar-backed buyers are benefitting from an effective discount of more than 10% since the start of the year due to the depreciation of sterling.
Knight Frank has seen a 22.1% rise in the number of new prospective buyers since the E.U. referendum versus 2015, while the number of properties in contract in the eight weeks since Brexit rose 19% compared to last year
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"It is still early for firm conclusions of future market moves following the E.U. referendum, however the worst of the initial forecasts appear to have been avoided to date," said Tom Bill, head of London residential research at Knight Frank.
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