Luxury Real Estate Market Slowing Following Brexit

Luxury property in New York City is spending more time on the market as buyers take advantage of the Brexit to negotiate prices.
By Krishna Thakker ,

NEW YORK (TheStreet) -- Luxury property in New York City is spending more time on the market, up 31% from last year to 169 days on average, CNBC's Robert Frank said on "Power Lunch" Wednesday afternoon.

Foreign buying of real estate in the U.S. fell this year, Frank added, citing a report by the National Real Estate Association

London has become more attractive to buyers in the U.S. due to the weaker pound.

Before Britain voted to leave the European Union $1 million was worth 236 square feet in London, but now it is worth 270 square feet. The same price in New York City however, is worth 290 square feet, Frank explained.

"The problem is really even at these discounts it's a crisis of confidence. So far you're just not seeing all that bargain hunting translate to sales" he said.

The Brexit had a strong impact on the luxury real estate market in New York City, as it led to people taking advantage of the uncertainty and using it to negotiate lower prices, Douglas Elliman real estate broker John Gomes told CNBC.

The top real estate market in New York City is currently weak, while the bottom, less expensive market is stronger.

"Any market below $3 million is I say raging. If its below $2 million, forget about it. There's a huge amount of demand and limited amount of supply, which is putting an upward pressure on pricing," Gomes said.

There are more expensive high end towers asking for $5,000 a square foot that aren't selling because for too long New York put all its focus on high end luxury, but then completely changed its course to focus on lower end real estate.

"We're trying to get it to a place where we normalize it, where we have a little bit of everything," Gomes said.

The best time to buy real estate is when the market is going down. The prices have recently gone down following the Brexit and will most likely continue to drop in the second half of the year, he continued.

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