London's property market, especially high end areas, will bounce back to growth once the uncertainty of Brexit has been settled.
After years of price falls and sluggish activity, the most expensive homes in central London will rise in value by 8pc in 2020. Between 2018 and 2022, prices are forecast to grow by 20pc, which would recover the fall of 15pc made since 2014.
We believe the risks regarding London’s position as a global commercial center have been overplayed. Whatever the challenge from other cities, London will almost certainly remain a key global financial center 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. However, it forecast that this house price growth will be more moderate than in the past, when there was average annual price growth of 5.7pc above the rate of inflation between 1979 and 2014. This is partly due to much higher levels of stamp duty on expensive property.
Before the UK's relationship with the EU is decided there will be flat levels of house price growth as investors put off purchases due to the uncertainty. House price growth in expensive areas of London outside the center will also be more moderate, at 5pc in 2020, partly because the market is more influenced by trends in the high value employment sectors such as finance, banking and tech, as well as the availability and cost of mortgage finance.