Business consultancy KPMG says that Capital Gains Tax and the threat of Britain leaving the EU after a referendum were the two major threats to the London housing market.
A poll of 70 of what the consultancy calls real estate experts shows the overwhelming majority believing London would retain its dominance in the full range of European property markets - but with those two risks identified.
The stuttering recovery in other markets is funnelling capital into London at the moment, which is driving this bullish sentiment says Richard White, UK head of real estate at KPMG. However, while the market is undoubtedly soaring, we will need to increasingly compete for this investment as economies in Europe strengthen.
The industry appears to be split over the impact that CGT changes might have, with 40 per cent believing the introduction of CGT for foreign investors would impact pricing in the prime housing market, while 47 per cent argued that it would not affect prices.
Those surveyed said the European referendum was of greater concern to investors than domestic politics. Some 66 per cent said that Britain leaving the EU would have a negative impact on inbound cross-border investment, but only 31 per cent thought that political uncertainty in the run up to the general election would dampen investment.
The spill-over effect of the UK leaving the EU is unlikely to be limited to London and the UK's real estate markets, but regardless of the long term impact there is likely to be a pause in deal activity as investors survey the new landscape, says White.
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