Post-referendum uncertainty in the wake of stamp duty increases has dampened the outlook for London's prime residential property, Savills said on Thursday, issuing revised five-year forecasts.
The broker said that vendors may have to drop prices by 6 or 7% to to secure sales while Brexit uncertainty remains, although currency fluctuations should aid the market.
Prime central London values are set to close 2016 by as much as 9% lower.
While negotiations on the UK's future relationship with the EU play out, value fluctuations should hover at around zero, before returning to capital growth in line with the long-term trend in 2019. Overall, the broker anticipates total growth of 21% in the five years from 2017 to 2021.
'The market will inevitably remain susceptible to fluctuations in buyer sentiment, but there is nothing to suggest the impact of the vote to leave will echo that of the global financial crisis,' commented Lucian Cook, Savills UK head of residential research. 'The summer market was slow but certainly not moribund, and the currency advantage brought international buyers back into the market.'
Savills said that the outer prime London markets, where prices average £2 mln (€2.3 mln), should be less impacted, but would probably close 2016 at -5%.
'Looking further ahead, we know the prime London markets have generally rebounded strongly after a period of adjustment. While the tax backdrop will continue to be factored into buying decisions, no other European city has the infrastructure to match London as world city and global financial centre and this should underpin a return to trend levels of growth,' added Cook.
