Chris Radburn/PA via AP
Pro-Europe protesters take part in a March for Europe rally from Park Lane to Parliament Square, in London in September, demanding a "pause" in the Brexit process and a continuation of close cultural and economic ties with Europe. The uncertainty about Brexit outcomes is affecting London house prices.

London house prices set to fall: Is this the 'Brexit effect'?

Prices appear threatened by uncertainty following the Brexit vote, as many companies are now uncertain where their headquarters will be. The real estate agency Savills says the Central London market should rebound over the long term.

House prices in central London look set to fall more than any time since the financial crisis, according to two estate agencies.

Savills predicts that the value of Prime Central London homes – defined as those in markets where the average price is around £4 million –  will fall by 9 percent in 2016. Knight Frank says that the annual growth in the market for these homes hit -1.8 percent in August. The two agencies attribute this decline to two factors: stamp duty, or sales tax, and a Brexit vote that has raised questions about the future of London as a financial center.

Until June 23, when Britons voted to leave the EU, the value of being in London was more or less unquestioned by financiers and corporations. A historical financial center, it also gave corporations access to the common European market. Around 5,500 UK firms rely on “passporting,” as it is called, to conduct their activities in Europe – and over 8,000 companies based in other EU states do business in the UK on the basis of these corporate “passports.” It is these corporations that are now uncertain about the merits of doing business in London, raising questions for those who live there.

“Brexit has clearly been a reality check for the high-value end of the market…. It’s difficult to see where upward pressure on pricing will come from until we know the outcome of the negotiations,” Savills Research Director Lucian Cook told Bloomberg.

Vodafone, the telecommunications giant, began to investigate alternatives to London following the Brexit vote, as The Christian Science Monitor reported in June. Other European countries are making a play for the corporate traffic they believe will move to places that can still promise the free movement of people, capital and goods. But the absence of a clear alternative may help prevent huge outflows of capital from the London housing market, as it will take companies time to plan their next move.

Stamp duty, or tax, has compounded the current decline in house prices in central London. From April 1, tax on landlords buying homes to let and on those buying second homes increased from 12 percent to 15 percent on a home priced at more than £1.5 million. This increase means that a £4 million home is now £120,000 more expensive. The law applies to both domestic and foreign buyers. To escape stamp duty, buyers are now looking at homes further outside London. This has driven up house prices in outer areas.

Tom Bill, Knight Frank’s head of London residential research, expressed concern about this shift to City A.M. He said, "If the pattern persists, the risk is that demand and property prices in outer boroughs will become further inflated and more susceptible to future price instability."

Nevertheless, for US-based buyers, now may be the time to purchase London property. The pound has been down against the dollar since the Brexit vote, at around $1.30 to £1.

In the long term, Savills remains optimistic about the central London housing market. The real estate agency suggests that the market will rebound for 21 percent growth between 2017 and 2021, as the UK’s financial future, as well as its relationship with Europe, becomes clearer.

"There remains a strong preference for London properties in the long-term as the city is still considered by most as a safe haven, even on the back of Brexit. Nevertheless, we have seen some Middle East investors looking to re-allocate a part of their portfolio to other geographical areas, due to the uncertainty in the mid-term that Brexit has triggered," David Godchaux, the chief executive of Core, the United Arab Emirates associate of Savills, told The National.

You've read  of  free articles. Subscribe to continue.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to

QR Code to London house prices set to fall: Is this the 'Brexit effect'?
Read this article in
QR Code to Subscription page
Start your subscription today