London property prices are expected to surge if the UK secures an EU free-trade deal as part of the Brexit negotiations.
Predictions from property specialists Savills indicate that property values in the capital could surge by as much as eight per cent in 2020 once the country’s future outside the European Union has been settled – with further rises in the following years.
The company expects prices to rise by more than 20 per cent in total by 2022, more than recovering all the ground lost since the market peaked in 2014.
However, the price increase projections are based on Britain securing an EU free-trade deal with Brussels, and transitional arrangements being put in place to ‘minimise business disruption’.
Property prices in the capital have been hit by the uncertainty over Brexit, with values this year having 3.2 per cent in central London and 2.1 per cent in outer London.
That means prices have dropped by 15 per cent and 4.7 per cent respectively from the peak in 2014. Since then, demand from overseas property investors has dried up as a result of higher stamp duty rates and the slow progress of Brexit talks.
Savills expect prices to remain flat over the next two years while the Brexit negotiations continue, before the recovery fully begins.
Head of world research at Savills, Yolande Barnes, said: ‘We think the risks regarding London’s position as a global commercial centre have been overplayed.
‘Whatever the challenge from other cities, London will almost certainly remain a key global financial centre and develop as one of several European hubs for the growing tech sector.
‘Its prime markets will therefore benefit from new domestic wealth generation as well as attracting wealthy international buyers.’
Lucian Cook, head of UK residential research at the agency, added a word of caution, saying: ‘Where sellers are pricing for today’s market, transactions are proceeding, but the market is highly discretionary and price growth is not anticipated until there is clarity over the UK’s future relationship with Europe.’