As the date of Brexit draws ever nearer, the London property market is beginning to feel the effects of Brexit and is seeing what the near future may hold for property in the UK’s capital. Following a poll by Reuters, of which involved 30 experts, it was found that prices for houses in London will decrease by an average of 1% throughout 2018, with some predicting a decreases of much more than that.
This does mean that London appears to be suffering much more than other key areas of the UK, especially considering that the national average for house price increases is expected to be 1.7% in 2018. It was also made clear that London is struggling when the Office for National Statistics released its latest figures, which showed that house prices in London dropped by 0.7% year on year in March 2018, which represents the biggest fall since the financial crisis.
The London Property Market set for a Difficult 12 Months
The poll by Reuters found that approximately 57% of experts believe that demand will slow down over the next 12 months, whilst the most commonly stated reason being Brexit. With just a year left until Brexit, it is thought that property investors are now willing to wait until post-Brexit before making their next move in the London property market, especially given the amount of uncertainty that Brexit brings. This means that London is surely set for a difficult 12 months, with nobody sure what post-Brexit will hold or what it will mean for the London property market.
Other reasons behind such difficulties are known to be tax regulations surrounding mortgages and the selling of property. It is common knowledge that the reduction of mortgage tax relief has had a negative impact on the market, which may also have an impact on the markets, especially within the south of the country.
Home ownership is also very difficult, especially for first time buyers. The average asking price of a home in May was £308,075 across the country, whilst London was more than double this figure. Such higher prices mean that first time buyers may struggle to save for a deposit for their home, and affordability for houses is somewhat disagreed on by experts. On a scale of 0 to 10, where 0 represents house prices being extremely cheap and 10 represents house prices being extremely expensive, the experts rated house prices across the country at a 7, whilst they rated them a 9 in London.
George Buckley, Chief UK Economist at Nomura said: “UK house price/earnings ratios are very high, but taking into consideration low interest rates affordability looks relatively normal.”
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Fletcher Day are a full service commercial law firm based, with a dedicated team of property solicitors in London who specialise in property acquisitions, financing, landlord and tenant matters and premises licensing.
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Daniel Peacock