Despite fears of a “hard Brexit” and Theresa May’s decision to call a snap general election in the UK, property experts predict that house prices for prime central London property will start to recover next year.
At the Middle East Real Estate Forum in Abu Dhabi yesterday, Cluttons said that after a dip of 3.5 per cent in 2016, it expected average house prices in prime central London to fall by another 1.5 per cent this year before starting to level out in 2018.
The property broker said that even in the event of a “hard Brexit” with the UK giving up all access to the single market, it expects cumulative growth for the five years from 2017 to 2022 to stand at about 9 per cent.
“We’re expecting that because we’ve started the clock ticking on the two-year exit process, so hopefully by then we’ll have some clarity on what post-Brexit Britain will look like and we think investors will be more confident and will return to the market in greater numbers,” Faisal Durrani, head of research at Cluttons, told delegates.
“People invest in London because it offers safety and security, it has a proven track record in delivering returns and we do not expect that to change any time soon.”
Sir Edward Lister, a former deputy mayor of London and chairman of the UK government’s Homes & Communities Agency, said that there was demand for between 250,000 and 300,000 homes a year to be built in the UK, while housebuilders were currently building between 95,000 and 170,000 each year.
“The run rate is far lower than the demand rate,” he said. “Hence prices will continue to rise, hence housing will remain one of the most difficult political issues in the UK. That’s why if you looked at the last general election it was the No 1 political issue and, if you cut Brexit out and assume it all goes perfectly, housing will again be the No 1 political issue.”
Last month the Royal Institution of Chartered Surveyors reported that house prices across the UK remained stable in February but continued a year-long fall in London.
Overall, Britain’s housing market has been holding up stronger than expected since last June’s Brexit vote. But in London the high-end market in particular has been under pressure from concerns about Brexit and higher purchase taxes.
Follow The National's Business section on Twitter