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[LONDON] The market for homes in prime central London is stagnating before the referendum on the UK's future in Europe, according to Knight Frank LLP, with price cuts of more than 10 per cent failing to attract buyers.
Values in the district of Hyde Park declined 4.8 per cent in the year to May, while they were 4.6 per cent lower in South Kensington and down 3.5 per cent in Chelsea, the London-based broker said in a report Tuesday. The number of active buyers has more than halved in the past year, according to the report.
The market for luxury homes in London's best districts is suffering as potential buyers await the outcome of a referendum on June 23 to determine whether Britain will withdraw from the European Union. 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 UK 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 per cent or more."
Across the capital, values for homes in the 14 districts defined as prime central areas grew just 0.1 per cent in May, the lowest increase since October 2009, the Knight Frank data show. Sales volumes in the month were "flat," the broker said.