UK property capital values fell by 2.8% in July, the biggest drop since March 2009, according to the latest IPD UK Monthly Property Index.
It was the second consecutive month of capital value falls following a 0.3% decrease in June. Total returns in July fell to -2.4%, down from 0.2% a month before.
The numbers from July represented the first full month of market activity following the EU referendum. Over the past six months, returns in all assets have stood at -0.6%.
Colm Lauder, vice president of MSCI, said: “The UK market, especially in London, had been keenly priced in the run up to last month’s vote, with yields in the British capital at historic lows and income returns among the least competitive in Europe.
“The record pricing in the real estate market could leave little room to buffer economic or political shocks, like Brexit, with values potentially falling further as occupier sentiment weakens.”
The IPD UK Monthly Property Index measures performance in more than 3,300 property investments – about 10.5% of the professionally managed real estate investment market.
Last week, CBRE reported that City office values fell by 6.1% while values in offices across the country fell by 4.1%.
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