The Brexit Effect: What's Next for London Real Estate?
PALACE Magazine|Issue 17

The UK’s historic vote to leave the European Union is the latest in a string of events that have dampened London’s property market. As the country enters new political territory, the upheaval may present opportunities for investors who believe in the city’s long-term resilience.

Sophie Kalkreuth
The Brexit Effect: What's Next for London Real Estate?

IN THE HOURS AND DAYS following the UK referendum, in which 51.9% of voters elected to exit the European Union, much of the country looked on in shock. The campaign had been a bitter and visceral one, driven by inciting rhetoric around British immigration, the economy and the bureaucratic elite, but many inside Britain and abroad did not expect the leave vote to prevail.

As the world grappled with the results, the markets reacted on a scale not seen since the financial crisis. The pound plunged to the lowest since 1985, Asian stocks tumbled and just days later news came out that Standard & Poor’s had stripped Britain of its triple-A credit rating. The vote has set the nation up for bitter divorce talks ahead, and, since there is no precedent for a country leaving the 28-member state EU trade block, uncertainty reigns over how exactly the UK will negotiate its new position within the political and economic landscape.

This uncertainty has already affected the property market, particularly in London where some buyers have been pulling out of purchases, concerned about the city’s future. The UK Treasury warned before the vote that residential property prices would be as much as 18% lower if the country voted to leave. Howard Archer, chief European and UK economist at IHS Economics said housing market activity and prices were at “very serious risk of an extended, marked downturn following the UK’s decision to leave” the European Union. He predicts home prices could fall 5% in the second half of 2016 and a further 5% in 2017.

“The vote in favour of Brexit will generate a period of renewed uncertainty in the prime London residential market”, said Liam Bailey, global head of research at Knight Frank in London. “Some demand, especially from investors, will be delayed and in some cases redirected”.

This story is from the Issue 17 edition of PALACE Magazine.

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This story is from the Issue 17 edition of PALACE Magazine.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.

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