Brexit to have varied impact on London property markets

New analysis from independent property buying agency Black Bric has looked at what impact a Brexit will have on London’s property market.

The firm suggests that the vote to leave the European Union is to have a varied impact on properties across the capital.

Investors

Black Bric said that sub £2million pound homes will continue to attract investors, due to domestic demand, high yields and good liquidity.

However, the firm’s MD Camilla Dell feels that the prime property market and new build outer prime markets could be set for difficulty.

Dell said, ‘we expect the section of the market dominated by domestic buyers and those working in the financial services sector, predominantly £2million to £5million but also up to the £12million to £15million range, to potentially face some pressure linked to Brexit concerns.’[1]

‘We do not expect the wholesale flight of financial services firms away from London, but it is likely that they will lose their passporting rights, or their ability to sell financial services across the EU if the UK does leave, triggering the departure of some financial services capacity to Dublin or the continent,’ she continued.[1]

‘However, even relatively low numbers of bankers leaving areas such as South Kensington or Notting Hill where Europeans, in particular, tend to be concentrated could have a significant effect on local markets over the next couple of years.’[1]

Outer-prime uncertainty

In addition, the firm expects the new-build outer prime market to be most at risk, with the sector already having seen a quiet period before the referendum.

Dell notes that, ‘The stock market has already heavily bid down builders linked to this part of the market, which is suffering from significant oversupply and the disappearance of the foreign investors who had supported it in recent years,’ said Dell.[1]

‘Areas such as Nine Elms in Vauxhall and Earls Court in West London are particularly vulnerable due to oversupply of expensive properties aimed at the overseas investor. However, there are a handful of stand out developments, such as Television Centre, that we believe are likely to continue to prove popular, and there will certainly be bargains to be had, particularly on the secondary market,’ she pointed out.[1]

Super prime positives

On the flip side, Black Bric expects the super prime market to be least affected. Dollar buyers are factoring in a 12.5% rise in their purchasing power.

‘For the global elite buying properties at £15 million to £20 million or above, purchases tend to be about lifestyle choices, rather than business decisions, or are to diversify extremely large portfolios. Indeed, we are still seeing transactions continue. Brexit did not feature in conversations with clients in this part of the market before the referendum, and it is unlikely to be much of a factor now it is underway,’ Dell added.[1]

Brexit to have varied impact on London property markets

Development

Moreover, London’s Deputy Mayor for Housing James Murray said there will be discussions with major developers and the G15, which represents the capital’s largest housing associations.

Aims of the meeting will be to secure significant housing settlement to drive new housing, allowing the capital to retain its property taxes and rushing through new planning rules to support build to rent developments.

Mr Murray noted, ‘last week’s European Union referendum result was not the outcome we wanted, but the fallout underscores how vital it is we do everything possible to stimulate and support the housing industry.’

‘There is no doubt that the vote has already caused uncertainty that will make it harder to fix the housing crisis, but our message to developers, housing associations and local authorities is that we will do all we can to give you the support and certainty you need to get through these difficult times,’ he added.[1]

[1] http://www.propertywire.com/news/europe/london-property-markets-brexit-2016070112094.html