Prime London house prices are now 5.3 per cent lower than at the time of the EU referendum admits Savills, following another fall in prices in the past three months.
Average prime London values dipped 0.9 per cent in the second quarter - they are now 6.9 per cent off their mid-2014 high; over the past decade, dating from when the financial crisis started, price gains in prime London have been around 30 per cent.
“Ahead of the vote to leave the EU, there were signs of a market bottoming following the adjustment triggered by the December 2014 stamp duty reform, and some locations had started to show price growth, but increased political and economic uncertainty has weakened fragile buyer sentiment” says Savills research head Lucian Cook.
As with the stamp duty effect, post referendum uncertainty is particularly impacting the most expensive and discretionary parts of the central London market, the agency says.
Looking specifically at prime central London - as opposed to prices in prime ‘pockets spread over a wider area of the capital - average prices dropped 1.3 per cent in the past three months to leave them down 6.8 per cent year on year and down 14.4 per cent from peak.
This leaves 10 year price growth in the UK capital’s most expensive central postcodes below the prime London average, at 23.4 per cent.
The agency says locations with a high proportion of buyers from the financial sector, whether domestic or European, such as Kensington and Notting Hill, Canary Wharf and parts of south and west London, have also seen small falls in the face of increased buyer caution.
Savills also suggests that its original forecast for 2017 - which was issued last November and suggested no change to prices in prime London - will need revising downwards.
“Increased levels of political and economic uncertainty make it less likely that year to date losses, which the firm puts at an average of -1.2 per cent across prime London as a whole and -2.1 per cent in prime central London, will be recovered in the short term” a statement from Savills says.