Potential buyers of London’s prime residential real estate should see discounts post-Brexit, but expecting full-fledged bargains would be unrealistic, according to a new market report.
“Forget a 10% below asking price. Realistically offering 7% (below) means setting on 5%,” said Charles Curran, principal and data analyst at Maskells Estate Agents, which on Monday released its market report for June. The report focuses on the status of the prime property market in central London after the Brexit referendum.
Owners of luxury properties in London tend to be debt-free and are unlikely to sell homes they paid a great deal of money for at a discount, especially if they don’t need to, the report found.
MORE:Is Now the Right Time to Invest in U.K. Real Estate?
The foreseen discount is still higher than the norm of 2% below asking price, said Mr. Curran, adding that occasionally, bidding wars result in prices above what sellers ask. Regardless, would-be buyers, especially foreigners, are already benefiting from a weakened pound.
“The drop in the value of sterling may attract foreign buyers, as London has become 10% cheaper against the U.S. dollar and 7.5% against the euro, effectively eroding much of the transaction tax we are subject to,” the report stated.
Earlier this year, the British government implemented a 3% sales tax on buyers of second homes and rental properties. This came on top of higher sales tax rates for expensive properties set in December 2014.
Whether would-be sellers accept lower offers or not will depend on them finding discounts for the properties they are seeking to move to. “This is a chain market and more often than not, families are seeking to trade up to larger homes, and a volatile market usually makes the financial chasm easier to breach,” Maskells said in its report.
While the brokerage does not expect “a flood of panic sellers driving prices down,” it does tell buyers not to be afraid of making offers “as they may find that they are accepted.”
MORE:Brexit Could Have French Heading Home
After the historic referendum on June 23, when a majority of U.K. voters favored an exit from the European Union, Maskells saw an increase in inquiries from would-be buyers. However, it attributes the activity to a pent-up demand from clients who had put their plans to buy on hold until after the vote.
The interest, said Mr. Curran, is coming predominantly from buyers in France, Germany, and Italy, who had already considered a purchase before the referendum.
And those in pursuit of discounts may need to move quickly. Maskells predicts volatility will ease, and there will be a return to the status quo by fall — providing a four-month window to make the most of the current discounts.