House prices in London have been faltering of late, and experts have now revealed their views on how a “disorderly” Brexit could further impact the capital’s property market.
A quarterly poll by Reuters of around 30 analysts and housing market experts has concluded that there could be a one in three chance of London’s housing market losing significant value by the end of next year if we end up with a “no-deal” Brexit.
The panel also predicted that property prices in the capital will drop by 1.6% over the course of 2018, with a further, more modest 0.1% fall next year. As the deadlines for coming to a decision on a Brexit deal loom, fears are rising that leaving the EU without a formal agreement being reached could be a very real possibility.
According to the experts, there is around a 29% chance of a “significant correction” in London’s housing market before the end of 2019, although at the top end of the scale one panel member believed this risk was actually 79%.
Interest rates could change
Tony Williams at property consultancy Building Value said that central London was “tanking because the traditional international buyers are staying away – and the quantum of buyers is falling.” He added: “A disorderly Brexit will exacerbate this trend.”
The latest figures from Hometrack for July revealed that London house prices had fallen annually by around 0.1%, although the average property asking price in the capital according to Rightmove’s August data is still sky-high at £609,205 – well above the UK average of £301,973.
Andrew Brigden at Fathom Consulting commented: “We see little upward or downward pressure on house prices at current near-zero interest rates. However, risks lie substantially to the downside.
“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%.”
A different story in Manchester
The north-west city of Manchester has seen markedly improved performance over recent years compared to London, and the forecast is bright for the city. According to Zoopla, more than a third (38%) of investors looking at purchasing property in the north think house prices are set to rise in Manchester, and 27% would be motivated to invest there because of the strong rental income.
