Has the housing bubble burst in London?

Listing prices in London’s luxury market have fallen 11.5 percent year-over-year

New York /
Nov.November 14, 2015 03:00 PM

The value of the London luxury housing market is experiencing a severe slump, leading some to question if the bubble has already burst.

The prices of homes in London valued at £5 million (roughly $7.6 million) or more dropped 11.5 percent on a per square foot basis in the third quarter from a year earlier, according to a study by Richard Barber, a director at brokerage W.A. Ellis, a division of Jones Lang LaSalle.

The study, cited by Bloomberg News, also showed that sales volumes across all homes in the most desirable neighborhoods of central London dropped 14 percent in the period.

“The bubble may already have burst” for the most expensive homes, Barber told Bloomberg. “36 percent of all properties currently on the market across prime central London are being marketed at a lower price than they were originally listed at, with the average reduction in price being 8.5 percent.”

Some are blaming the slump on Chancellor of the Exchequer George Osborne’s stamp duty increase. The change means that the purchaser of a £5 million home now pays £513,750 in duty, about £164,000 more than in the past.

“The downturn in price growth in 2015 has reduced the number of these properties entering the market as discretionary vendors are willing to wait for prices to recover,” broker Strutt & Parker wrote in another report this week.

The report also acknowledged that the strength of the pound has made it more difficult for overseas buyers to afford London real estate. [Bloomberg]Christopher Cameron


Related Articles

arrow_forward_ios
Adding 1,500 units would be a significant boost to the housing stock of the district, which has only about 8,000 residents. (iStock)
Plan would convert London offices into 1,500 apartments
Plan would convert London offices into 1,500 apartments
Cheung Chung-kiu with photos of the mansion and renderings of the renovation (2-8A Rutland Gate)
The $500M house: Cheung Chung-kiu to overhaul $276M London mansion
The $500M house: Cheung Chung-kiu to overhaul $276M London mansion
Nick Candy and One Hyde Park (Getty, Wikimedia/Rob Deutscher/Flickr)
Sweet Jesus: Nick Candy asks $241M for London penthouse
Sweet Jesus: Nick Candy asks $241M for London penthouse
Birmingham and Bournemouth both saw a giant increase in demand. (Getty)
Demand for rentals rises in UK’s largest cities in Q1
Demand for rentals rises in UK’s largest cities in Q1
Glympton Park and Prince Bandar bin Sultan. (Getty, Twitter via NicholasKingsle)
Saudi prince sells 2K-acre UK estate to Bahrain’s royal family for $165M
Saudi prince sells 2K-acre UK estate to Bahrain’s royal family for $165M
Suneil Setiya and the One Hyde Park complex (Photos via Wikipedia Commons/Rob Deutscher and Synergos)
Phat flat: Hedge funder nears deal for $153M London penthouse
Phat flat: Hedge funder nears deal for $153M London penthouse
The average price of a London home rose above 500,000 pounds, or roughly $685,000, for the first time. (Getty)
London home prices hit new high
London home prices hit new high
Renderings of the "city within a city" concept outside central London. (Brent Cross Town)
Related is all in on “15-minute city” in London
Related is all in on “15-minute city” in London
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...