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London needs 7% property price drop to settle prime market – Savills

  • 20/09/2016
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London needs 7% property price drop to settle prime market – Savills
A Savills report suggests a 7% property price adjustment is needed to re-balance the market in London in the wake of the Brexit vote.

London’s high value homes market is expected to continue to adjust through 2016 and then hover around zero before returning to capital growth in 2019.

House prices are expected to close 2016 down -9.0% with total growth of 21% forecast in the five years between 2017-2021.

Simon Collins, product technical manager at John Charcol, says he has not seen a rise in price negotiations getting in the way of mortgage completions. What he has seen is an increased hesitance to invest in the wake of the referendum result.

“No one is quite sure what is going to happen because we don’t know what Brexit will look like. All we know is that it is going to happen. There is a lot that could occur but until then it is business as usual.”

The prime central London market where values hover at around £4m, have been impacted the most as prices were -8.1% below their 2014 peak at the time of the referendum in June.

This is in contrast to lower value London markets where the average house price is around £2m. Total price falls of -5.0% are expected by the close of 2016 with a lower total five-year growth by 2021 of 14.6%.

“The market will inevitably remain susceptible to fluctuations in buyer sentiment, but there is nothing to suggest the impact of the vote to leave will echo that of the global financial crisis,” said Lucian Cook, head of residential research at Savills UK.

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