Property prices in prime central London are expected to end the year 9% lower than when 2016 started as buyers wait to see how Brexit negotiations proceed, according to a report.
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Savills, which had estimated values would surge 21.5 per cent in the five years through 2020, cut that forecast to 3.2 per cent. Add the “Brexit bonus” of a cheap pound and foreign house hunters could be in for a bargain.
“The combination of high levels of stamp duty, a substantially less benign underlying tax environment for overseas owners, and general uncertainty following the Brexit vote, indicates that further price adjustments are needed to make the market more fluid in London”, said Lucian Cook, Savills U.K. head of residential research.
The pound has dropped well over 13% against the dollar since the United Kingdom voted to leave the European Union on June 23.
Nearly three months after the British public voted in favor of leaving the European Union, Savills, a global real estate consultancy, has become the latest organization to deliver its verdict on what it all means for central London’s housing market, including the likes of posh Knightsbridge, Chelsea and Belgravia.
The estate agent said it expected prime London property prices, which already average £4m, to jump by more than a fifth between 2017 and 2021, as London remained an attractive place to invest. That kind of money can buy you a four-bedroom apartment (with three bathrooms) in the exclusive neighborhood of Belgravia.
As a result, Savills believes that further price adjustments downwards in the order of 6 or 7 per cent will be required to secure sales as buyers wait to see how Brexit negotiations proceed, and the impact on the United Kingdom and London economy becomes clearer, although the falling pound is a clear boost to worldwide buyer interest. Uncertainty surrounding the outcome of the UK’s negotiations to leave the European Union will accelerate declines that began when higher sales taxes were introduced a year ago, Savills said.
The city’s most expensive homes have been the worst performers in central London’s best districts in the last five years, the report shows.
Don’t have 4 million pounds to spare?
Central London properties worth about 2 million pounds, will drop by 5% this year and 1% in 2017, Savills said.
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In the long-run, however, the news appears more positive.
