How has the decision to leave the EU impacted the London property market?

It is well known that the property market suffers from a ‘summer slump’ every year. However, this year it has been hugely exaggerated following the Brexit vote. Over the past 6 years the average price drop in July has been around 0.4% but this July has seen a 0.9% decrease in asking prices. It appears that the vote to leave the EU has unsettled the housing market causing sellers to settle at lower prices. There are big concerns with what this means for both those looking to buy and those with property they are hoping to sell.

For sellers, buyer demand is not out of line with this period in previous years meaning that there is certainly still a market for those looking to put properties up for sale. Agencies have reported a surge in interest from overseas buyers from dollar-denominated countries as they are able to take advantage of the drop in sterling. It is also clear that family housing is still in high demand and is likely to remain so, despite changes to the wider property market.

The drop in asking prices has put buyers in a relatively strong position, allowing them to take their time and put in lower bids with more chance of getting them accepted. There has been an increase in buyers looking to renegotiate prices down. It has been suggested that lower bids will encourage sales and work to recover the market, though it is difficult to see how Brexit will impact property sales in the long term.

Those looking to get onto the property ladder are likely to be in a stronger position than normal particularly as mortgage lenders have been fairly consistent during the Brexit backlash. Buyer caution as a result of political uncertainty means that buyers are facing less competition which increases the chances of making a successful bid. However, there is still a lack of affordable housing available and so although a decrease in bidding has been seen, that is not to say that it is now easy to buy an affordable property.

The uncertainty of the property market is set to continue for the foreseeable future and it is unclear when things will begin to balance out. It is too early to tell what the long-term impact of the vote to leave the EU will be on the property market. Many property experts predict that buyers will be taking a ‘wait-and-see’ approach which will ultimately slow market growth due to a lack of sales. However, with a new Prime Minister already in office the market could perhaps begin to stabilise more quickly than predicted as political strength increases.