After the United Kingdom voted to leave the European Union, the economy nationwide has started to falter. Leaving the EU will negatively affect countless businesses and private individuals, so it is no surprise that the housing market in London has already started to decline. The Royal Institution of Chartered Surveyors (RICS) has conducted the first major survey that examines the effects of Brexit.
Overall, home and property prices in London have not been so low since the financial crisis of 2008. The RICS survey found that real estate agents were recording lower closing and listing pricings nationwide after Brexit, and the prices in the United Kingdom’s capital are dropping faster than other areas in the nation. Not only are the prices unusually low, but the RICS survey says that it is also the quickest and sharpest fall since 1998.
The lower prices are due to a sudden lack of demand in London real estate and a decrease in home supply. Agencies have noted that they are having far less inquiries from new buyers, and people who were in the process of real estate negotiation have stopped or asked for a lower price after the Brexit vote. Some sellers are also taking their properties off of the real estate market after the Brexit vote.
The data from the RICS survey suggests that the next few months will continue to have lower prices, and this drop in London real estate may even continue for an entire year. Many experts are even predicting that the Bank of England will be lowering interest rates for the first time in seven years. Acadata, a house price index research company, reports that 21 out of 33 boroughs in London have had a drop in prices. The average cost of a home in London is just 589, 435 pounds. Acadata reports that leaving the EU has “clearly unnerved many buyers and sellers, and it is evident that some are reevaluating what they do.”
Economist Kallum Pickering explains that the economic and political uncertainty caused by Brexit has deterred people from wanting to invest in such a large and long-term financial burden. London is a truly international city, but if the United Kingdom leaves the EU, many individuals will have trouble traveling for work or making business deals with foreign companies. Most residents of London voted to prevent Brexit and remain in the EU, so they are now reconsidering their real estate decisions in the wake of the vote.
Elie Hirschfeld is NY real estate developer.