London Property Sees Brave Bet By Norway As Foxtons Profits Plunge

London Property Sees Brave Bet By Norway As Foxtons Profits Plunge

– Sales in London property market at ‘historic lows’

– 65% fall in pre-tax profits in 2017 to £6.5m reported by London estate agents Foxtons

– Foxtons warns 2018 will ‘remain challenging’ for London property

– Norway’s sovereign wealth fund is backing London’s property market

– RICS: UK property stock hits record low as buyer demand falls

– Own physical gold to hedge falls in physical property

The world’s biggest sovereign state fund is backing the London property market. The news comes at a time when the UK capital’s real estate market is reportedly at ‘historic lows’ with conditions expected to remain challenging.

There is a risk that Norway’s investment decision will end up being famous example of buyer’s remorse. Activity in both the London and UK housing market continues to slow, new buyer enquiries are at an 11-month consecutive low and agreed sales are down for the sixth month.

There appears to be little sign of recovery given Brexit-jitters and the resulting damage from years of rampant inflation that has pushed prices out of the reach of many.

Norway is possibly out on its own when it comes to confidence in the London property market. Foxton’s and the Royal Institute of Chartered Surveyors (Rics) are indicating that not only has the last year been tough but that it is set to continue into 2018.

This makes for a tough situation for those who have little option to be involved in the UK property market or not. Many don’t realise that even if they do not own a property, they are still exposed to the risks involved in a housing crash. A downturn or total collapse of the property market would not just affect homeowners and mortgage providers. It would send major waves through the rest of the economy.

London property agent Foxton’s sees ‘historic lows’ 

Foxton’s profits for 2017 took a 65% hit thanks to a slowdown in the real estate market. Whilst they say that this was in line with expectations, few can have expected it to be this tough and to continue into 2018.

The fall in profits has been blamed on Brexit uncertainty and stamp duty changes. These factors along with highly inflated prices have have driven sales in the capital to near record lows. Overall it is political uncertainty which currently appears to be preventing anyone from making any new moves on the housing ladder.

A new survey of estate agents has shown that in London we are seeing the chronic housing shortage most concentrated. Rics’s monthly residential market survey found that the average number of properties on estate agents’ books has hit a record low and is “unlikely to improve”. In the good times estate agents will have around 42 properties on its books, London branches are now reported to have just 33.

Property website Rightmove says London property owners need to be aware that the capital has moved out of its boom phase. Sellers must be more realistic about the prices they are likely to sell for given they have fallen for the sixth month in a row. In the fourth quarter of 2017 London property prices fell by a sharp 4.3%. This was the worst quarterly performance since the financial crisis.

The boom time was always going to come to an end. The surge in London property was thanks to easy monetary policy by the Bank of England and debt-fuelled spending from across the world. Neither were sustainable sources of income for the capital’s property market.

The problem with London is that the boom has ended prematurely thanks to Brexit. Whilst many could predict the end of a boom created by tightening of lending, i