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Taking stock: What’s happened to London house prices since the Brexit vote?

UK houses failing to sell post-Brexit

Nearly a month after the Brexit referendum, what's happening to London house prices?

What the data say

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Data providers may differ in their choice of what to measure but the numbers still point to the same broad picture – and it's bleak.

Data from distressed property specialist, Propcision, shows failed sales in the week following the Brexit vote spiked to 8 percent from the average weekly rate of 5 percent. That figure worsened the following week with a jump to 9.25 percent.

This plays into data from LonRes showing a 163 percent leap in the number of properties pushing through price reductions in the 12 days following the referendum compared to the ‎total for the 12 days before the vote. The data indicate either jilted sellers finding themselves back on the market or sellers, fearing a market turning in favour of buyers, downsizing their expectations. The same period, LonRes found, showed a 33 percent drop in the number of properties going under offer and an 18 percent slippage in properties sold.

Over at Rightmove, data for the period comprising two weeks pre-Referendum and post-Referendum showed a 1.2 percent fall in Greater London house prices versus a 3.3 percent jump for the same time last year.

However, opinion is divided on how much influence the Brexit vote has contributed to market weakness, with many still claiming ongoing policy changes must shoulder the lion's share of blame.

What the anecdotes say

Looking ahead, bruised sentiment paints an equally morose picture. The widely tracked monthly sentiment index from the Royal Institute of Chartered Surveyors (RICS) for June shows overall U.K. house buyer enquiries dropping to their lowest point since mid-2008. The number of houses put up for sale also fell by the steepest amount on record. This as London house values showed both a monthly fall and negative price expectations extending to the next 12 months

Politics and policies

Although the swift appointment of Theresa May as Britain's Prime Minister has lessened some uncertainty, there is still a lot of questions over the U.K.'s future relationship with the European Union. Within Westminster, a lot also depends on whether new Chancellor Phillip Hammond will act to mitigate the sharply negative effect of recent policy changes on housing activity levels. Calls for a rolling back of stamp duty or a short-term "holiday" from the tax to jumpstart the moribund market continue to mount.

The government boost to the property market needn't be at the expense of government goals. One idea could be to lessen the burden on the sub-£1 million pound market while keeping the high charges intact for the prime market. This could potentially kick-start lower-end transactions without punishing – and even potentially boosting - Treasury revenues, while continuing to let steam escape from top-end valuations which ramped up disproportionately in the years preceding the leveling-off in prices which began in mid-2014.

David Adams, Managing Director at John Taylor, suggests an even more radical idea: "Post-Brexit we may even be able to have a lower level of stamp duty for U.K. citizens and a higher level for foreigners, something which is against EU policy. This would solve a lot of problems, both politically and economically."

The longer run

On the economic front, with U.K. consumer confidence plummeting to a 22-year low in June, a potential U.K. recession– and if it occurs, its depth, breadth and duration – could present a further crucial variable.

Data Tuesday out of manufacturers' organisation, EEF, show plunging confidence about the resilience of upcoming orders, particularly from domestic customers, with 29 percent of respondents expecting a fall. CEO Terry Scuoler told CNBC: "Manufacturers are most focused on risks from the Brexit vote coming to bear over the next six to 12 months, as evidenced by over half of firms saying they'll review both U.K. recruitment and investment plans."

Given the fog, some are finding it difficult to forecast for the short-term, let alone further out. However, other experts are noting interesting underlying trends that may reflect a more durable change to market levels.

Referring to data gleaned from RICS' June survey, Chief Economist Simon Rubinsohn observed: "Although we don't normally put such a weight on five-year views, policy changes affecting buy-to-let in particular look to potentially be having an enduring effect with projected sales price growth notably lagging rental growth over this forecast horizon."

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