London's prime property market hit by Brexit uncertainty, Savills says

The value of properties in London’s high-end market will stall until 2019 due to uncertainty over Brexit, according to a report by Savills.

The real estate agent expects house prices in city’s luxury market will fall 9% in 2016 compared to a year earlier while the rest of London is predicted to drop 5%.

Uncertainty following the UK’s vote to leave the European Union on 23 June and tax increases on expensive properties are likely to delay the prime market’s return to growth, the report said.

Savills said many buyers are waiting to see the outcome of Brexit negotiations, which are expected to start next year.

“The market will inevitably remain susceptible to fluctuations in buyer sentiment, but there is nothing to suggest the impact of the vote to leave will echo that of the global financial crisis,” said Lucian Cook, Savills UK head of residential research.

“The summer market was slow but certainly not moribund, and the currency advantage brought international buyers back into the market.

Once the prime market sees prices start to rise again in 2019, Savills estimates an 8% increase. However, the agent believes it will depend on tax charges and the Brexit deal.

“Looking further ahead, we know the prime London markets have generally rebounded strongly after a period of adjustment.” Cook said.

“While the tax backdrop will continue to be factored into buying decisions, no other European city has the infrastructure to match London as world city and global financial centre and this should underpin a return to trend levels of growth.”