See the Bloomberg article here
A couple of interesting stats: house prices in London are up 86% since 2009. The usual rule of thumb for London is that prices double every 10 years so that seems on track and nothing to be alarmed about.
Well, except for Brexit… The doubling of house prices every 10 years in London is a measure that to some degree depends on the UK being part of the EU. Would we have seen double digit growth every 10 years had the UK never joined the EU? Maybe but if you look at the state of the UK economically before joining the EU there must be some doubt. Whether this will hold going forward with the UK out of the EU (it might) we don’t know. The smart money says no. To double every ten years you need roughly 7.5% growth year on year. Assuming we see house prices in London growing at 4% post-Brexit then the numbers look interesting. A £1million house in London will grow to £1.48million if growth is 4% year on year. At 7.5% growth year on year, the number would have been just over £2million. This means everyone with a house around £1million is facing a £580 000 loss over the next 10 years or roughly £58 000 per year. Even if you halve the value of the house to £500 000 you are still talking about a Brexit cost of £250 000 over 10 years or roughly £25 000 per year. Like it or not, this could be the new reality.
See my previous articles: Brexit has not yet happened so the real upside or downside is yet to be determined.
Re the article though: price reductions in asking prices seems right and is in line with selling price drops we have seen since the referendum. Nothing new here. Essentially the story is: nobody knows what is going to happen when Brexit occurs. As such, sellers are getting nervous and trying to get out of the market, investors are no longer investing and we are sitting with a stamp duty second home punitive tax system that was set up assuming a remain vote in the referendum. As the vote went the other way, the government will have to rethink stamp duty and the tax treatment of second homes/buy-to-let as both are no longer fit for purpose.