Jitters in London luxury flat market as investors sell for ‘bargain’ prices
Apartments bought off-plan offered for sale at less than price originally agreed
with developers as data suggests Brexit vote could lead to housing sales slump
The first real signs of distress in the market for luxury London apartments are
starting to emerge, as investors who agreed to buy homes off-plan are starting
to sell them on for less than they agreed to pay for them.
Property websites are now advertising many unfinished flats being offered for
sale by the buyers who originally agreed deals with the developers.
Estate agents and developers are generally coy about how much sellers were
expecting to pay on completion, but some listings reveal that people are selling
at or below the original purchase price, hoping the “bargain” price might pull
in a new buyer.
This week, estate agent LondonDom.com was advertising several properties in
central London for less than the original price charged by the developer. These
included a three-bedroom apartment in the Battersea Riverlight development being
marketed at a guide price of £1,890,000. The listing for the flat, which will
not be ready to move into until 2017, described the sale as a “Hot EXCLUSIVE
deal – now asking less than the original purchase price from the developer in
2013.” The listing has now been changed to describe it as “well priced”.
Another “sub-penthouse” apartment in the Riverlight development, which is part
of the vast Nine Elms development area that has sprung up on the south bank of
the Thames, is ready to move into and is being marketed at £1.1m – £75,000 less
than the original sale price. The agent’s description read: “Urgent sale –
asking now LOWER that the original purchase price of 2013, which was £1,175,000.
Due completion – NOW.”
George Shishkovsky, managing director of LondonDom, insisted the sales were not
a result of the UK’s Brexit vote or a fall in confidence in the market. “It’s
all about people’s circumstances,” he said. “Usually people buying off-plan do
so two or three years before completion and in that time circumstances can
change.”
The reductions mean sellers will need to make up the difference between the
price they get and that they have agreed with the developer. Shishkovsky also
pointed out that the falling pound meant that overseas investors selling for
less than they had agreed to pay were not necessarily making a loss. “If someone
bought for £1m and is now selling for £980,000 that £20,000 will be easily
absorbed by the exchange rate when they convert it back.” But the lower prices
do demonstrate that the era of soaring prices seems to have come to an end.
Henry Pryor, who buys homes in London for wealthy clients, said he believed that
the top end of the market had peaked and that currency gains wouldn’t make up
for the fact that many flats had simply been overpriced: “Sterling-based
property may be 10% cheaper for foreign buyers but much of it was 30%
overpriced.” He added: “Expect to see more of this as the post-Brexit [vote]
reality bites.”
Elsewhere in London, a flat in the super-luxe One Blackfriars development is
being advertised for “less than the developer’s price”, and the agent selling it
said that its £2.65m price tag was less than the original buyer had paid. He
also cited personal circumstances as the reason for the sale.
- Theguardian
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