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London house prices are expected to fall this year as Brexit hampers demand, according to a Reuters poll of housing market specialists.

Property prices in the capital are forecast to fall by an average of one per cent this year, which would mark the first annual dip in nearly 10 years, according to the poll of 30 experts. They are expected to bounce back within a couple of years though.

The survey predicted that home prices will rise on average 1.7 per cent across Britain this year, dropping back behind inflation, with a 2.5 per cent rise in consumer prices expected.

Looking further ahead, growth in house prices is expected to pick up next year – with a rise of two per cent nationally, and a more muted 0.5 per cent rise in London. By 2020, house prices are forecast to increase by two per cent both in the capital, and in Britain.

Reuters said the range of forecasts for London house prices in particular was very varied though, with forecasts coming in calling a six per cent fall to a 2.5 per cent rise.

Oliver Knight, associate at estate agency Knight Frank, told Reuters a lot of uncertainty lingered in the market “as to where we are with Brexit negotiations”.

“That has really kept a lid on further growth. There is a wait-and-see attitude,” he said.

Figures out last month from the Office for National Statistics said house prices in the capital had fallen by 0.7 per cent over the past year, which was the biggest fall since 2009.

The ONS said the dip in London prices is predominantly due to a steep fall in demand relative to supply, and that could balance out prices to make buying a home there more accessible.

Brexit may have reduced the appeal for overseas buyers, according to the ONS, while falling demand for property in London could also be partly attributed to reductions in mortgage interest relief.

“With the referendum and subsequent uncertainty regarding Britain’s political and economic environment, perceptions of the future value of London property have been adversely affected,” said the ONS. “This is what you might call a fall in ‘speculative demand.”

Source: City A.M.

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