According to a survey carried out by London property research firm LonRes, 79% of estate agents reported that the referendum had caused the majority of their buyers to delay their decision to purchase in the second quarter. The number of properties sold in Q2 2016, across three prime areas in central London, fell by 41% compared with the first three months of the year. This would explain the drop in property prices in Kensington and Chelsea in the month of June – referred to above.
Interest in prime central London is currently being driven by a weak sterling which has started to attract a new wave of foreign investors. These currency movements will largely be dependant on the expected performance of the economy post brexit and on monetary policy action by the Treasury.
An early return of consumer confidence (as is being suggested in the latest ONS report) would however mean that this ‘buying window’ in prime central London may not last as long as was originally anticipated. The attractiveness and long term prospects of this part of the property market remain strong.
Outside prime central London there has been a large amount of new supply (newly built apartments/schemes) coming on to the market. Coupled with weaker demand this over supply is starting to put the breaks on the phenomenal growth that this part of sub-prime London experienced in recent years.
In terms of market performance for this year, CBRE in its post-Brexit referendum market review has retained its forecast of a 5% increase in property prices across London and a 3% increase for prime central London.
