U.K. real estate prices may be dropping at a much faster pace than official reports indicate, according to the Irish agency that manages property loans acquired from bailed-out banks.
Reports since Britain’s vote to leave the European Union point to the value of land in central London declining by more than 10 percent in the past year, while house prices are 11 percent below their 2014 peak, said Frank Daly, chairman of Ireland’s National Asset Management Agency, known as NAMA.
“Our analysis suggests that the fall in U.K. prices may be much higher than official estimates,” Daly told lawmakers in Dublin on Thursday. “Analysts are forecasting that prices will fall further over the coming years, partly in response to a weakening economy and to the likelihood that companies will move staff overseas in response to Brexit.”
Irish ministers and executives are closely monitoring economic and market developments in the U.K. because the country is Ireland’s largest trading partner along with the U.S. Earlier this month, Stephen Vernon, chairman of Dublin-based Green Property, said London’s real estate market is “tanking by the day.”
Office values in the City of London financial district fell the most in at least seven years in July after the Brexit vote in June, according to CBRE Group Inc. Home prices in the U.K. capital fell for a fifth month in August, the worst streak since 2009, as higher taxes and the referendum result damped demand.
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NAMA took over billions of euros in risky debt following the financial crisis in 2008 and Ireland’s international bailout. The agency’s debtors have 800 million pounds ($995 million) in assets located in Britain, down from 12 billion pounds in 2011. Among loans NAMA took over were those linked to the Battersea Power Station site on the banks of the River Thames. It sold them on in 2012.