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London Properties Worst-Affected by Drop in Asking Prices

Asking prices for homes in the UK are falling after the EU referendum, but the reduction appears to be consistent with the typical seasonal trend, in which the property market undergoes a summer slowdown.

Property listings portal Rightmove stated that in England, the average asking price for a home in August was £304,222, which is down 1.2%. Rightmove confirmed that the average summer price reduction over the previous six years is also 1.2%. The average price actually rose 4.1% year on year.

Rightmove director Miles Shipside said that many prospective buyers pause their house-hunting activities in the summer, and those who do come to market tend to be much more aggressive in their pricing. Mr Shipside added that uncertainty over Brexit and the aftermath of the March buy-to-let rush also had an effect on summer sales.

There are also regional differences. In the West Midlands and Yorkshire & Humber, asking prices actually rose over the month. The monthly decreases in the Wales and the East and North East of England were all considerably slower than the average for the rest of the UK. In London and the South East, however, asking prices were falling more quickly than the average.

The month-on-month decrease of 2.6% in London is more rapid than anywhere else in the UK. Mr Shipside said that an aggressive stamp duty and sorely taxed affordability have heavily curtailed any price boom in the capital, where the average asking price is currently £619,409.

 

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He explained that at this time of year, interest levels from buyers seeking the more expensive properties offered in London tend to decrease, as they tend to be discretionary movers. After initially waiting for the result of the Brexit vote, some now appear to be waiting until the summer holidays conclude before deciding what to do.

Within London, pricing activity also varies sharply from one borough to the next. In the City of Westminster, which is one of the most expensive as well as the worst-performing, prices dropped 14.5% in August to an average of £1,629,205. Enfield, one of the cheapest boroughs, was also the best-performing, with a 4.5% increase in asking prices to £492,283.

Many fear a UK recession in the wake of Brexit. Some companies are delaying or canceling investment plans because of the overall economic and political uncertainty. The Bank of England has cut interest rates in an effort to generate more demand in the housing market.

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