Why Brexit could be good news for London property prices

10 Jul 2018

Peter Izard

Business Development Manager for Intermediaries

Bad news sells and this especially rings true when it comes to property prices. Brexit has created an abundance of negative headlines over the last two years, with the finance and property markets at the forefront of many.
 
Even before the UK voted to leave the European Union, Chancellor George Osborne warned that house prices would plummet by 10% to 18% if such an outcome were to occur.
 
London’s status as the business hub of the world has also been brought into question post the referendum with warnings that financial firms in particular may embark on a mass exodus from the capital - taking thousands of employees with them.
 
Such scenarios might be good headline-grabbers but I expect the reality will be much different.
 
The foundations that the London market has been built upon are strong and many will not change in a post Brexit world. In fact, for some, Brexit may even make the London property market more appealing.
 
‘Some investors are actively looking to buy now and take advantage of current market conditions in case prices shoot up once Brexit negotiations have been finalised.’
There is still a lack of available stock in London and assuming other wider global issues such as Middle Eastern conflicts and Russia don’t impact the global economy, London will hold its appeal. 

Unlike the Eurozone, the UK is still not pursuing quantitative easing and the Bank of England’s decision to rise the UK base rate demonstrates the robustness of our economy.
 
House prices may remain static this year but Savills predicts in 2020 the prime central London market will see an 8% annual increase and five-year compound growth of 20.3%.
 
English is also the international language of business and straddles the perfect time zone between east and west. Brexit may encourage some firms to do increasing business elsewhere but in terms of living – I suspect many workers may prefer to make a European commute than trade in their London residence, not to mention the UK’s world-class education system.

8%
annual increase in prime central London property by 2020
House prices may remain static this year but Savills predicts in 2020 the prime central London market will see an 8% annual increase and five-year compound growth of 20.3%.
 
In fact, there are reports that some investors are actively looking to buy now and take advantage of current market conditions in case prices shoot up once Brexit negotiations have been finalised.
 
With the Government also pledging to reduce Corporation tax and the benefits that Crossrail will bring, there is every reason London property will come back with a vengeance post Brexit, perhaps even stronger than ever.

 
To read the full article on Financial Reporter click here.
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