London property market and No-Deal Brexit
An already fragile London property market could be pushed over the edge by a no-deal Brexit, mortgage lenders have warned.
A “no-deal” Brexit would hit the capital’s house prices “like a sledgehammer”, a London mortgage lender warned today as new figures show the property market is falling at its fastest rate since the Olympics.
Jonathan Samuels, chief executive of specialist home loans company Octane Capital, said a combination of rising interest rates, stretched household finances and stubbornly high inflation were already making potential buyers think twice about making offers.
However, any failure to come to an agreement with Brussels would push the already fragile London property market over the edge.
“A Brexit no-deal could hit prices in the capital, especially at the higher end, like a sledgehammer,” said Mr Samuels.
He spoke as Britain’s biggest building society, Nationwide, revealed that prices fell by a higher-than-expected average of 0.5 per cent across the UK in August, the biggest monthly drop since July 2012.
City analysts had been forecasting a slight rise of 0.1 per cent. The drop left the average price of a home nationally at £214,745, although they are much higher in London.
Octane Capital is based in Camden. Mr Samuels said that the London market was uniquely exposed to the fallout from a “chaotic” exit from the European Union next March because of its dependence on international buyers.
“A no-deal Brexit could make international business and overseas buyers extremely nervous, at least in the short term,” he added.
“Given that the London property market is heavily exposed to big business and international buyers, if both begin to retreat in the event of a no-deal Brexit, prices in the capital could suffer disproportionately.
“The London market is already reeling after a period of overexuberant growth, and a chaotic exit from the EU has the potential to accentuate this.”
The August fall in prices comes after the Bank of England pushed its interest rate to 0.75 per cent, the highest since March 2009.
The move added about £30 a month to the repayment bills on a typical £250,000 variable rate mortgage in London.
Jonathan Hopper, managing director of buying agents Garrington Property Finders, said: “While some lenders have been quick to pass on August’s interest rate increase, the rise in mortgage costs remains modest and is likely to prove an annoyance rather than a barrier for most would-be buyers.
“Of greater concern — especially for investment buyers or those looking at the top of the market — is the prospect of Britain sleepwalking into a no-deal Brexit. Softening prices in formerly overheated markets like London and the South-East have created some compelling buying opportunities, particularly for the bold and strategic buyer.”