UK Luxury Property Sales Collapse Post-Brexit

Things just went to '11' on the Spinal Tap amplifier of Britain's property market. Having detailed the numerous 'dominoes' that have begun to fall, and the start of forced real asset liquidations, the hard data from Britain's Royal Institute of Chartered Surveyors suggests Brexit just killed the British housing market... and even more crucially, as Bloomberg reports, a measure of London (luxury) home-price changes crashed to its weakest since the financial crisis as the U.K.’s vote to leave the EU sent shock waves across the nation.

Having previously shown the following chart as an example of the 'liquidity gap' between fund-level liquidations and the exuberant UK real estate market, warning that things could get ugly very quickly...

 

Bloomberg reports, they just did! The index by the Royal Institution of Chartered Surveyors dropped to minus 46 in June from minus 35 the previous month, showing that more real-estate agents are recording lower prices in the capital than higher ones. The reading was the weakest since early 2009. All responses were received after the EU referendum on June 23.

A separate report from Acadata Ltd. and LSL Property Services Plc showed home values in the capital were already being hurt ahead of the vote, with prices decreasing 1.4 percent in May, the biggest monthly fall since June 2011.

 

RICS’s survey provides the first insight into the impact the decision to leave the EU is having on the housing market. It shows nationwide demand falling to its lowest level since the middle of 2008, while the number of properties put up for sale plunged to a record low. A gauge of sales expectations for the next three months was at its weakest in 28 years.

“It was always likely we were going to see a bit of a fallout from the EU referendum,”  Simon Rubinsohn, RICS’s chief economist, said in an interview on Bloomberg Television with Guy Johnson and Caroline Hyde.

 

“It’s also part of a trend that emerged at the start of the second quarter, particularly the London data.”

The Brexit vote has “clearly unnerved many buyers and sellers, and it is evident that some are reevaluating what they do and/or are attempting to renegotiate the price,” they said.

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