Leave voters around the UK will be amused to hear that London’s property market is facing further problems over the next two years if the UK leaves via a hard Brexit, a poll of 30 analysts and experts by Reuters last week has revealed.
The irony of the poll – given that London voted overwhelmingly to stay in the EU vote in June 2016 – won’t be lost on the capital’s estate agents.
Reuters says the experts predict that on average prices will drop by 1.6% next year and by 0.1 a year after, although not as much as in 2016 when prices reduced by up to 15% in some areas.
“In the short term the additional uncertainty will disproportionately affect London, causing the value of some properties, particularly high value properties, to fall further,” said Ray Boulger (left) at mortgage broker John Charcol.
Tony Williams at property consultancy Building Value, believes London’s property market is ‘tanking’ because the traditional international buyers are staying away and the overall required number of purchases needed to keep the market afloat is not being maintained. “A disorderly Brexit will exacerbate this trend,” he says.
Other analysts polled by Reuters described a hard Brexit as both ‘damaging’ and ‘a disaster’ while one expert said a significant correction in London had a 75% likelihood.
“We see little upward or downward pressure on house prices at current near-zero interest rates. However, risks lie substantially to the downside,” said Andrew Brigden (right) at Fathom Consulting.
“Were interest rates to return to pre-crisis levels or higher, which may prove necessary if there were a sharp fall in sterling after a General Election, for example, then house prices could fall by around 40 percent.”