London property is the area most vulnerable to an unfavourable Brexit negotiation, Walker Crips’ James Allen has claimed.
He echoed concerns that the City requires access to Europe and beyond to maintain its position as one of the dominant financial centres of the world.
“Should the City come under sustained attack from our European neighbours then not only would property in London become less attractive, the loss of revenue would have a massive impact on GDP and the exchequer,” warned Mr Allen, head of Walker Crips Alternative Investments.
He went onto say: “This, in turn, could precipitate a recession and during recessions there are more people who default on mortgages. So in the medium term, a bad deal could create further weakness in the UK property market.”
Mr Allen expressed his opinions on the possible long-term impact of Brexit on the property market in an FTAdviser Guide to buying property in a Brexit world.
Alex Gosling, chief executive at HouseSimple, agreed that if London were to see a mass exodus of workers as they relocated to other EU countries, then it could have a significant impact on the London property market.
"Similarly, foreign investors who have pumped money into London property over the past 10 years - considering it a safe haven - may take flight. That could hit the top end of the London property market, which could work its way down the property chain,” he added.
However, he pointed out there was no longer such a reliance on strong London house price growth to support regional markets.
“In fact, it's the capital's property market that has stalled, while regional property markets are prospering,” he said.
“This can be partly attributed to the growth of regional business hubs, such as Manchester, Cambridge and Bristol, offering good job prospects and affordable housing.”
The September house price index released earlier this week by Your Move showed annual price growth steady at 3.3 per cent outside of London and the south east, while in London prices fell by 0.7 per cent year-on-year.
Commentators also voiced concerns about the effect that curbing immigration could have on property supply in the UK.
Zachary Gauge, European real estate analyst at UBS Real Estate and Private Markets, observed: “When you speak to housebuilders today, they’re already citing lack of labour as one of the reasons why they can’t progress with more schemes and build faster.
“So if you take away a big chunk of their future workforce, it costs more to employ staff to do the building work you need to do but then you have capacity constraints as well.”
Mr Allen acknowledged: “With tightened immigration and a lack of skilled labour from the continent there will be little chance of addressing the lack of housing supply.”
Read the guide to buying property in a Brexit world and bank 60 minutes of CPD here.
eleanor.duncan@ft.com
