【World Property Journal】London Housing Market Still Being Impacted by Brexit in 2020

Based on new research by international property consultant Knight Frank, the headline rate of the UK's house price growth continued to slow through 2019, leaving annual house price growth for the UK 0.7% at the end of October 2019, down from 3% at the same point last year and down from more than 6% as recently as 2016.

Uncertainty regarding the outcome of Brexit weighed on buyer sentiment through the year, particularly in London and across the South, where prices are expected to end the year either flat or falling.

The clarity afforded by a Conservative majority in the General Election should remove some of that uncertainty - as well as the threat of an economic recession - increasing the likelihood that the UK will leave the European Union on January 31, 2020.

In the short-term, this will pave the way for the release of some of the pent-up demand that has built in recent years, though the extent to which this translates into transactions will depend on the size of the pricing expectation gap between buyers and sellers.

The risk of a no-deal has not completely disappeared, however, and December 2020 marks the end of the transition period, potentially raising the spectre of a no-deal in the second half of 2020.

Elsewhere, interest rates are also likely to begin a gradual process of normalisation in 2020, which could mark the end of a period of ultra-low mortgage rates and squeeze affordability for some purchasers. Even so, Knight Frank expects rates to be low compared to long-term norms by the end of the forecast period, with economists expecting interest rates of below 2% by 2023.
 

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