House prices in London and the South East will soften following Brexit, according to a research paper published by estate agents Avison Young.
The paper ‘Brexit: Implications for real estate’, summarises the potential outcomes in the short-term should a deal be completed next month.
Avison Young analysts outline that in the near term, prices are expected to soften in London and the South East, while price growth across the remaining regions is likely to stay flat.
The report expects growth in the build-to-rent sector to continue in 2019, with activity extending out of London and the South East.
However, the firm adds that a no-deal Brexit could create renewed depreciation and add pressure on the cost of imports, subsequently leading to build cost inflation.
The analysts behind the paper believe activity in affordable housing will remain resilient amid Brexit, particularly from REITs and private funds.
The limited supply of prime stock in London is expected to prevent rents from falling, the paper finds, although this is anticipated to increase pressure on headline rents, as incentives are already at high levels.
Avison Young outlines that it expects to see positive rental growth for prime office space in key regional cities but that the impact of either a no-deal Brexit or a ‘rework and delay’ outcome is likely to have an adverse effect on the London and regional development market.
The firm expects GDP growth to be weak in 2019 with businesses unlikely to invest significantly.
Despite this, the estate agency’s analysts believe the UK will remain resilient.
