Prime Central London market 'lethargic' as EU referendum edges closer

A high-end agency claims that despite prices falling in Prime Central London (PCL), demand was subdued in May due to the prospect of the upcoming EU referendum.

Knight Frank's latest Prime Central London Index shows that annual growth in the PCL market slowed to 0.1% in May, the lowest level recorded in almost seven years. 

It reports that despite asking prices falling by more than 10% in some areas, the uncertainty over the referendum result later this month is having an effect on buyer demand. 

The agency says that the number of active buyers to available properties in PCL has halved over the last year.

Tom Bill, Knight Frank's head of London residential research, says that the market has become price-sensitive due to two stamp duty increases in the space of 18 months. 

He says, however, that despite the looming referendum, there are signs underlying demand is strengthening as buyers drop asking prices to reflect higher transaction costs.

"The number of transactions between January and mid-May was flat this year compared to 2015," he explains.

“Meanwhile, viewings increased 31% between January and April versus last year, suggesting a degree of pent-up demand.”

Last month, George Osborne claimed that average house prices could fall by up to 18% if the public votes for a Brexit on June 23, while the National Association of Estate Agents and the Association of Residential Letting Agents released a 23 page report on the EU referendum and how it could affect the property market.