Since the UK voted to leave the European Union on 24th June there has been an overwhelmingly pessimistic response from London property agents and the media in regards to the future of the London property market.
Despite this, a number of commercial agents in London have reported that investment deals have not been as affected as predicted, with less than 10% of deals made prior to the vote failing to proceed. Although there has been some renegotiation there has reportedly not been a noticeable drop in prices.*
Estate agents in Central London have continued to suggest that house prices have dropped within the most expensive postcodes. Despite this, viewings of residential lettings for London’s luxury homes have reportedly increased by 15% in comparison to last year. Many have been by commercial tenants, as experienced by Davis Brown through the letting of a newly refurbished flat with patio on Goodge Street.
The Bank of England’s reduction of the base rate to 0.25% could encourage more people to move their savings into property with a chance for better ‘tracker mortgage’ deals. As London still seriously suffers from a ‘housing crisis’ it is difficult to see if it really will see a significant drop in housing prices as many are predicting.
Halifax*** has reported that despite erratic changes in the House Price Index immediately post BREXIT, the market remains robust overall. There were severe falls recorded in Knightsbridge, but this was an area favoured by overseas investors, which had already seen a significant drop in investment due to increased stamp duty. Outside of these few areas the property market has appeared to remain stable overall.
Although the future remains uncertain, evidence suggests that the impact of the BREXIT vote has been less than expected so far, and where prices have fallen this appears to be most influenced by change in stamp duty.
Changes in the property market over the next few years may be largely influenced by negotiations and decisions made by the Government both overseas and in the UK. If the approach is to incentivise people to work and invest in London and the rest of the UK once leaving the European single market, the pessimists could be proven wrong. We will just have to wait and see.
*CoStar article 25th July – Investment transactions holding up well post Brexit vote
** Telegraph 3rd August – What Brexit property lull? Renting London’s luxury homes on the up
*** The Week August – Post-Brexit house prices remain ‘robust’ in July