Prime London prices may stagnate thanks to EU uncertainty warns major agency

Cluttons is warning that the prime central London market may stagnate for at least the early part of this year thanks to uncertainty over the EU referendum.

The agency says full-year price growth in PCL is unlikely to exceed 2.5 to 3.0 per cent for that reason. 

Throughout 2015, PCL capital growth reached 5.3 per cent; in 2014 it was 9.6 per cent. 

"Of the cocktail of macro and domestic economic risks, which range from economic malaise in China, weak oil prices and a strong US dollar, all of which are weighing on global sentiment, the uncertainty surrounding the exact date of the EU referendum poses one of the most significant risks to the ability of the London residential market to sustain its positive growth trajectory" claims Faisal Durrani, Cluttons head of research.

Cluttons anticipates demand during 2016 to be driven by domestic buyers with a focus on the £500,000 to £1m price bracket. 

However, London’s residential market is still anticipated to be starved of stock during the year, which will help marginally increase prime values, although perceived value ‘hot spots’ are likely to outperform.

“With the unemployment rate sitting at a record low of 5.1%, the lowest level since 2006, coupled with continued positive wage growth, domestic housing demand is likely to continue in the near term" says Durrani.

"We must remember that domestic demand is largely centred on secondary, period stock, which remains in short supply and is an irreversible issue" he warns.