An investment bank says the price of new-build upmarket London flats could fall by as much as 20% this year.
The warning is from Morgan Stanley and comes in the context of supply of expensive new developments in areas such as Canary Wharf and Battersea.
The bank said that it was “assuming a 10-20% fall in new-build high-end residential pricing in 2016” as it lowered its rating on Capital & Counties, the firm regenerating the 77-acre site at Earls Court.
Trevor Abrahmsohn, head of agent Glentree International, told the London Standard: “Asian buyers — from Malaysia, Singapore, Hong Kong and China — are walking away from their commitments to buy properties in, for instance, east London and Nine Elms.”
“They would rather lose 10% than complete the purchase and lose a lot more, even before the developments are complete.
“The changes to buy-to-let tax is the straw that broke the camel’s back.”
Comments (3)
May be our Trev has a view on the EU ref too?
It’s not quite as simple as just walking away from a 10% exchange.
When this last happened developers pursued the clients for non completion. They are entitled to the remarketing costs and any shortfall in the new selling price has to be made up by the original purchaser who defaulted on the contract.
They can try and flip the property but they would probably take a hit in the current market.
This highlights the problem with buying off plan in London where developments are years from completion. A lot can go wrong from the time you sign the contract.
As for BTL tax. I am really struggling to understand how that impacts on the far east. In fact they are now better catered for than UK buyers.
it is quite as simple as walking away from the 10% espicially when you are a buyers in Malaysia, Singapore, or China. good luck to developers pursuing clients for non completion in those countries!