BUZZ-Capital & Counties: Liontrust sells on London luxury property fears

** London prime property prices are worrying Liontrust fund manager Stephen Bailey, who has sold his holding in London-focused developer Capital & Counties

** UK housing stocks among worst affected by UK's vote to leave the EU (Thomson Reuters Homebuilding index off lows but still down 26 pct since Brexit)

** Worries focused on slowdown in foreign investment and oversupply in London luxury property

** Capco fell >5 pct on Tuesday when it wrote down the value of one of its prime holdings in London by 14 pct, following in the footsteps of St. Modwen's 10 pct cut to its stake in upmarket Nine Elms early July

** Capco's shares now down 36.5 pct YTD and one of the most shorted stocks in the FTSE 250

** Bailey more confident on outlook for affordable housing, prefers construction stocks such as Telford Homes (LSE: TEF.L - news) (focused on non-prime London), Kier Group (LSE: KIE.L - news) and Galliford Try (both nationwide)

** Kier saw no Brexit impact due to its wide range of activities, while Galliford said too early to tell (RM (LSE: RM.L - news) :kit.rees.thomsonreuters.com@reuters.net)