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London’s Home Owners Slashing Prices in Bid to Close Deals on Prime Properties

Home Owners

Affluent property owners in London now find themselves in a quandary. The country’s escalating mortgage crisis is pushing them to slash prices. It's a bid to offload prime real estate.

Deals for properties worth £5 million ($6.4 million) or more have seen their asking prices slashed. The number of affected deals was almost double from the start of the year to July. A report from property researcher LonRes noted the difference. It compared current numbers to that from the same period in 2022. The group also revealed the transactions in London’s affluent property market slipped. It went down by over 25%.

LonRes’ Nick Gregori said the mercurial mortgage market’s impact on this sector isn’t as direct. The head researcher added that it will change market sentiments though. He explained it will cause buyers and sellers to feel uncertain.

Millions of properties in the UK have gone down in value in 2023. The reduction was due to three key elements. The uncertainty over the economy and expensive borrowing has had a detrimental effect. So does the current cost-of-living crisis. It’s reportedly the worst in a generation.

These factors have led to a widening margin in price expectations. Luxury London home sellers and buyers have different outlooks. And some dealers are not amenable to cutting their prices.

This unwillingness to cut asking prices has resulted in many transactions collapsing. There’s a 15% rise in erstwhile lucrative deals falling through between January and July. It’s a large increase when compared to the same period of the previous year.

Experts are also worried because the number of properties that were under offer in July was 14% lower. The exorbitant financing costs have caused prospective buyers to back down.

There’s a silver lining though. London’s high-end housing market isn’t dependent on debt and mortgages. This ensures even the more expensive properties on sale are holding up better. Especially when compared to their cheaper counterparts.

Recent instructions for properties £5 million or higher went up by about a third. This was in comparison to the 12.4% reduction across the entirety of prime London.

LonRes noted the decline is not as obvious as actual sales. This is despite the drop in homes that were under offer in the past month. The sales figures for the coming months might even look better if these deals push through.

Gregori says there’s a chance the housing market will end in 2023 on a stronger note. But only if the economy begins to perform better and if borrowing costs settle down.

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