London prime residential prices will grow again by 2019 and grow by 20.3% over the next five years, according to Savills.
Its Prime London and Country Report, which focuses on second hand stock, says prices will fall by around 4.0% in 2017, be flat in 2018, then start growing again afterwards.
Prime pricing in central London is expected to significantly outperform outer London prime areas, which will see growth of about 10.2%, and prime areas around the rest of the UK.
Yolande Barnes, head of world research at Savills, said: “We think the risks regarding London’s position as a global commercial centre have been overplayed.
“Whatever the challenge from other cities, London will almost certainly remain a key global financial centre and develop as one of several European hubs for the growing tech sector. Its prime markets will therefore benefit from new domestic wealth generation as well as attracting wealthy international buyers.”
Since 1979, average growth in prime central London has been 5.7%, meaning a 20% increase over five years is still down on trend.
Savills said that the higher costs of buying a homes, exposures to capital gain and inheritance tax will all continue to moderate price growth.
Lucian Cook, head of UK Residential Research, said: “Uncertainty fuelled by Brexit and a weakened government mandate since the June election, means sentiment is fragile.
“Where sellers are pricing for today’s market, transactions are proceeding, but the market is highly discretionary and price growth is not anticipated until there is clarity over the UK’s future relationship with Europe.”
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