Brexit to diffuse London house price boom
By Duncan Ferris
Date: Friday 23 Feb 2018
(ShareCast News) - UK inflation will outstrip gains in house prices this year and next, particularly in London, as Brexit confusion looms and low consumer spending power scuppers demand, a Reuters poll found on Friday.
This latest poll of 33 housing market specialists, taken in the past week, states that property prices will increase by 2% this year, significantly less than the 2.5% predicted increase for general costs in the economy.
House prices in London are predicted to be even further outstripped with a 0.5% drop predicted as Brexit based uncertainty spreads amongst the foreign investors who once pushed the prices so high.
Rod Lockhart at mortgage lender LendInvest, said: "Would-be sellers are holding onto assets for longer and buyers are being a little more diligent before committing to significant expenditures, all this against a backdrop of inflation-surpassing wage growth."
The current weakened state of Sterling, 6% down on its state before the nation voted to leave the EU, could do a little to attract foreign investors to the London property market.
"Foreigners get more pounds in their pockets, but the nation and its capital has lost some of its allure," said Tony Williams of Building Value.
Respondents in the poll listed Brexit as a negative for turnover and prices in London but were unsure of whether this applies to the nation as a whole, and none of the 18 respondents to a question regarding turnover in London's housing market thought that it would increase.
Marcus Dewsnap of Informa Global Markets said: "Given stretched income/price levels and lack of supply in London especially - plus macroprudential attempts to rein in buy-to-let - it is difficult to see turnover doing anything other than fall."
In 2019, house prices are predicted to see a 0.9% rise in London and 2% nationally, still well below the 2.1% expected inflation rate.
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