A no-deal Brexit could lead to a downward spiral for the capital's property market, say experts, as much as 40%
The possibility of a rocky EU exit could throw London’s property prices into turmoil.
A Reuters poll of 30 property experts predicted that house costs in the capital will fall by 1.6% this year and 0.1% next year.
When asked how a chaotic EU departure would affect prices, expert answers from the poll ranged from “short term fall” to “damaging” and “disaster”.
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Analysts quizzed also rated the likelihood of a significant market drop at nearly 30%, with one respondent predicting figures could fall even lower.
Andrew Brigden from Fathom Consulting said: “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%”.
Britain is due to leave the EU in March 2019 but there are growing fears that a deal will not be reached in time.
Potential buyers put off
The possibility of a no-deal Brexit is said to be deterring overseas buyers from investing in the London market, leading to increasing odds of a house price crash.
Jonathan Samuels, chief executive of home loans company Octane Capital, remarked: “A Brexit no-deal could hit prices in the capital, especially at the higher end, like a sledgehammer.”
“Given that the London property market is heavily exposed to big business and international buyers, if both begin to retreat in the event of a no-deal Brexit, prices in the capital could suffer disproportionately.”
He explained that rising interest rates, stretched household finances and stubbornly high inflation were among the reasons dissuading potential buyers.
An increase in stamp duty costs for second homes is also likely to be an influencing factor on property purchases.
Outpriced Londoners relocating
According to Rightmove, the average London house price currently stands at a steep £749k, more than twice the national average.
This comes hot on the heels of news that Londoners are upping sticks to move to more affordable parts of the country. The number of movers to locations including the north and the Midlands has tripled since 2010.
Contrary to the glum forecast for the capital, the Reuters poll predicted prices for the UK overall were set to rise by 2% this year and next, and 2.3% in 2020.
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