The first real signs of distress in the market for luxury London apartments are starting to emerge, as investors who agreed to buy homes off-plan are starting to sell them on for less than they agreed to pay for them.
Property websites are now advertising many unfinished flats being offered for sale by the buyers who originally agreed deals with the developers.
Estate agents and developers are generally coy about how much sellers were expecting to pay on completion, but some listings reveal that people are selling at or below the original purchase price, hoping the “bargain” price might pull in a new buyer.
This week, estate agent LondonDom.com was advertising several properties in central London for less than the original price charged by the developer. These included a three-bedroom apartment in the Battersea Riverlight development being marketed at a guide price of £1,890,000. The listing for the flat, which will not be ready to move into until 2017, described the sale as a “Hot EXCLUSIVE deal – now asking less than the original purchase price from the developer in 2013.” The listing has now been changed to describe it as “well priced”.
Another “sub-penthouse” apartment in the Riverlight development, which is part of the vast Nine Elms development area that has sprung up on the south bank of the Thames, is ready to move into and is being marketed at £1.1m – £75,000 less than the original sale price. The agent’s description read: “Urgent sale – asking now LOWER that the original purchase price of 2013, which was £1,175,000. Due completion – NOW.”
George Shishkovsky, managing director of LondonDom, insisted the sales were not a result of the UK’s Brexit vote or a fall in confidence in the market. “It’s all about people’s circumstances,” he said. “Usually people buying off-plan do so two or three years before completion and in that time circumstances can change.”
The reductions mean sellers will need to make up the difference between the price they get and that they have agreed with the developer. Shishkovsky also pointed out that the falling pound meant that overseas investors selling for less than they had agreed to pay were not necessarily making a loss. “If someone bought for £1m and is now selling for £980,000 that £20,000 will be easily absorbed by the exchange rate when they convert it back.” But the lower prices do demonstrate that the era of soaring prices seems to have come to an end.
Henry Pryor, who buys homes in London for wealthy clients, said he believed that the top end of the market had peaked and that currency gains wouldn’t make up for the fact that many flats had simply been overpriced: “Sterling-based property may be 10% cheaper for foreign buyers but much of it was 30% overpriced.” He added: “Expect to see more of this as the post-Brexit [vote] reality bites.”
Read more at: https://www.theguardian.com/society/2016/jul/22/jitters-in-london-luxury-flat-market-as-investors-sell-for-bargain-prices