Luxury London Home: “Unbelievable Reduction”

Originally published by Bloomberg on January 4, 2018 Read the original article.

A few years ago, London’s residential real estate market was on a tear, experiencing a big comeback from the 2007-2009 financial crisis.

For example, this is from a Sept. 27, 2013 CNN Money article:

London house prices have hit record highs, jumping by 10% in a year and earning some lucky homeowners more than their annual pay packets.

But, EWI’s December 2017 European Financial Forecast provided an update that included a bearish forecast:

The UK property market has entered the early stages of a decline that should intensify in 2018. The latest weakness is apparent on this chart of year-over-year price growth in London private rental houses … . Last month’s decline below 1% represents the market’s slowest growth in seven years.

So, EWI’s analysts were not surprised by this latest news from Bloomberg (Jan. 4, 2018):

“Unbelievable reduction,” says the broker’s email.

An investor who agreed to purchase an apartment at the ritzy One Blackfriars project on the banks of the River Thames is offering the two-bedroom home on the 20th floor for 1.8 million pounds ($2.44 million), more than 22 percent less than they agreed to pay for it in 2013.

The seller, who’s from Asia, wants to offload the property before it’s completed, according to Christian Barr, new homes manager at MyLondonHome, who’s brokering the sale. Stamp duty is payable after a property’s construction is finished.

The good news for the seller is that there are two firm bids for more than the asking price, from English and Chinese investors, Barr said. He declined to disclose the level of the bids. The vendor wanted to sell within seven days, according to the email.

The stockpile of unsold London homes under construction rose to a record in the third quarter as developers ramped up supply. London was the worst-performing home market in the U.K. last year for the first time in more than a decade as values in the capital fell 0.5 percent, according to Nationwide Building Society. That’s the first full-year decline since the 2009 recession.

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