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London real estate sales jump after Brexit vote

Estate agents' 'To Let' and 'Let By' signs stand in front of residential properties in the Brockley district of London, U.K.
Simon Dawson | Bloomberg | Getty Images
Estate agents' 'To Let' and 'Let By' signs stand in front of residential properties in the Brockley district of London, U.K.

Sales of prime London real estate jumped 38 percent in the week after the U.K. voted to leave the European Union, as a slide in the British pound attracted bargain hunters seeking a rare opportunity to buy the city's property at a discount.

The number of residential real estate sales in London during the last week of June — just days after the June 23 Brexit vote — increased 38 percent compared with the previous week, according to data from Knight Frank. Sales were 29 percent higher than the last week of May, the leading U.K. real estate brokerage said.

The company does not give out actual sales numbers.

"We saw a definite uptick," said Liam Bailey, global head of research for Knight Frank.

London has become a global hub for the super rich, with Middle East royals, Russian oligarchs and Asian billionaires buying up townhouses and penthouses. Many saw a buying opportunity as the British pound tumbled roughly 15 percent versus the dollar in the days after Brexit. That decline made property cheaper for dollar-based buyers.

"Our Hong Kong investors especially tell us they see currency opportunity," Bailey said. "And we certainly are seeing a scattering of sales because of the currency movement."

The lift in sales also came from sellers who lowered prices both before and after the Brexit vote, over the risk of further weakness.

"Weaker price growth, together with rising economic and market uncertainty surrounding the European vote, has prompted vendors to reduce asking prices over recent months," said Tom Bill, Knight Frank's head of London residential research.

Still, analysts don't expect the June surge to last through the summer. Data on showings and buyer interest suggests that many plan to stay on the sidelines in coming months, Bailey said. Several banks, including Singapore's United Overseas Bank, have halted mortgages for London properties. And on a year-over-year basis, sales were down about 10 percent.

While the number of sales in London popped at the end of June, prices continue to fall. Average prices in prime London areas fell by 0.2 percent in June as compared to May. Prices in the prime Chelsea area are down 5.1 percent year-to-date.

"Our views is that it's early days and everyone is waiting to see what the terms will be between The U.K. and Europe," Bailey said. "That will take time. So we expect the property markets will slow through July and August."