London house prices tipped for shock fall thanks to Brexit

 
London house prices tipped for shock fall thanks to Brexit (iStock/Pogonici)

House prices in London could be about to see their first fall since the financial crisis, according to a panel of 30 housing market experts assembled by Reuters.

The survey found a consensus that the impact of Brexit on the housing market would bear down on property investment everywhere, with the mean prediction for average house prices across the country as a whole being an increase of just 1.7 per cent in 2018 - a real terms fall as Consumer Price Index inflation is expected to run at about 2.5 per cent. 

In London, where high rates of house price inflation in recent years have been fuelled by overseas investors, a decline in buyer numbers will ensure a price drop in absolute terms, with the average prediction being a drop of one per cent this year. However, individual panel members varied widely in their London forecasts from a rise of 2.5 per cent to a plunge of six per cent.

The panel noted that while property in the UK is cheaper for foreign buyers due to the lower value of the pound since the EU referendum, the uncertainty over the country's economic future - particularly London's role as a global financial and commercial centre - has deterred many buyers. 

However, the decline in prices is expected to be replaced by a reversion to low growth in 2019 and beyond, the panel predicted. The mean forecast for next year is for a two per cent rise across Britain as a whole and 0.5 per cent in London, with both markets seeing two per cent price growth in 2020.

Commenting on the situation in the capital as Brexit looms, Oliver Knight, an associate at estate agency Knight Frank, said: "There is a lot of uncertainty in the market as to where we are with Brexit negotiations. That has really kept a lid on further growth. There is a wait-and-see attitude.

"We will see a slightly better performance in 2019 as the pressures between supply and demand really start coming together."