EU referendum reportedly dragging on London luxury home sales

The market for homes in prime central London is stagnating before the June 23 referendum on the UK future membership of the European Union, Bloomberg reported, citing Knight Frank LLP.

The report said price cuts of more than 10% were failing to attract buyers.

Values in the district of Hyde Park declined 4.8% in the year to May, while they were 4.6%t lower in South Kensington and down 3.5% in Chelsea, the London-based broker said in a report on Tuesday. The number of active buyers has more than halved in the past year, the Bloomberg report added.

The market for luxury homes in London’s best districts is suffering as potential buyers await the outcome of the in or out referendum. Campaigners to remain in Europe claim a so-called Brexit could cause companies to cut investment and relocate workers.

“There has been a discernible Brexit effect on the U.K. economy as decisions are delayed, and the London property market is no exception,” Tom Bill, head of London residential research at Knight Frank, said in the report.

“An indication of the Brexit effect is that demand in May has remained subdued even for properties where asking prices have fallen by 10% or more.”

Across the capital, values for homes in the 14 districts defined as prime central areas grew just 0.1%t in May, the lowest increase since October 2009, the Knight Frank data show. Sales volumes in the month were “flat,” the broker said.