Savills has revised its forecasts for the housing market and says that uncertainty over the impact of Brexit points to two further years of no growth in prime London.
“Thereafter, when uncertainty clears and central London’s prime residential real estate again represents identifiably good value, prices will bounce, though not to the same extent as in previous cycles” the firm claims.
It says five year price growth to the end of 2022 is expected to total 20.3 per cent in prime central London – but this is based on a Brexit free-trade deal with Brussels and transitional arrangements in place “to minimise business disruption.”
Savills also warns that wider prime markets across the rest of London will see less growth.
This wider market is, Savills cautions, “more dependent on domestic buyers employed in the financial and business services sector for whom mortgage affordability is more of an issue. Average growth in these markets is projected to total 10.2 per cent [by late 2022].”
“While projected five year growth of 20 per cent may look ambitious in the current climate, it represents a departure – likely permanent – from the historic trend … which saw average annual price growth of 5.7 per cent above the rate of inflation between 1979 and 2014” Savills says.
Yolande Barnes, head of world research at Savills, claims however that “London can retain its position amongst an elite group of cities.”
She says that the higher costs now associated with buying a high value home, and the greater exposure to capital gains tax and inheritance tax for overseas owners will continue to moderate price growth regardless of the Brexit outcome.