Strutt & Parker is warning that Prime Central London prices could drop as much as five per cent in 2018 - and could stagnate for the next five years.
Strutts gives both a ‘best case’ and a ‘downside risk’ forecast for the next five years in a document released today; in its most optimistic assessment, it suggests PCL may see no price change in 2018 followed by recovery thereafter. This could mean a total price rise of 23 per cent by the end of 2022.
However, its downside risk assessment is much gloomier.
It warns that prices in PCL could drop by five per cent in 2018 and see only muted growth of one or two per cent annually thereafter: so by late 2022 prices would be only where they are now, not taking into account inflation.
“Previously it was believed much of the downward pressure on PCL house prices due to Brexit had already been experienced. However, prices in the high value brackets (£2m to £5m and £5m+) have continued to fall and transaction levels, which at one point appeared to be picking up, have now fallen again. Substantial economic and political uncertainty remains and its does not look likely that will resolve any time soon” warns Guy Robinson, Head of Residential Agency at Strutts.
Vanessa Hale from the agency’s research division says: “It is forecast that the UK economy will grow by 1.6 per cent over the whole of 2017, while forecasts for 2018 and 2019 have been downgraded to 1.2 per cent and 1.4 per cent respectively. While political and economic conditions remain uncertain, we have seen slower than expected house price growth.
“With the current Brexit negotiations underway, we continue to maintain that from 2019 onwards it is extremely difficult to forecast the housing market with any certainty, but we would expect some bounce back and a return to growth once more political stability has returned.”
Last week both JLL and Savills produced their long-term forecasts - both were pessimistic about market activity and price rises in both the London and mainstream markets between now and 2022.