A range of experts are predicting that inner London property prices will fall or plateau in 2017.
According to forecasts gathered by My Property Consultant, a service for buy-to-let landlords, the Centre for Economics and Business Research sees returns of -5.6 per cent, Hometrack UK a gain of 2 per cent and Countrywide a loss of -1.25 per cent for London as a whole.
When forecasts are broken down for central and outer London the forecasts diverge.
Rightmove predicts an increase of 3 percent and Savills a 1 percent increase for outer London, while for inner London Rightmove predicts a drop of 5 percent whilst Savills sees no rise or fall.
David Wise, investment director of Kames’ property team and manager of the £435m Kames Property Income Fund, says better returns will be found outside London for at least 12 months, and possibly longer.
“London is the big risk when it comes to Brexit, although it was already a long way through its rental cycle and was probably due a slowdown anyway,” he said.
“The depreciation of sterling has and will underpin the London market so returns will not fall off a cliff, but it will likely be a market that it is better to be out of for the next year to 18 months.”
However, Peter Izard, business development manager at Investec Private Bank, said that while conditions for London did not look promising, there was a potential upside from Brexit.
"In a post-Brexit London market, the government may well reduce corporation tax and if they do that then it will make London very appealing for overseas companies, so there will be an increase in employers and employees."
He added that there was as yet not many forced sellers in the London residential market, which would also help maintain prices.