Prices on high-end central London properties are expected to fall by six per cent this year

Helen Cahill
Follow Helen
GBR: James Hewitt Arrested On Drugs Charges
Stamp duty changes have scared off landlords thinking of buying prime London property (Source: Getty)

The price of high-end homes in the centre of London is expected to fall by six per cent this year.

According to estate agency Countrywide, prime central London property will be "the hardest hit" in the months after the EU referendum.

In the market as a whole, house prices will fall by one per cent next year, Countrywide said. The group predicted London house prices will drop by 1.25 per cent next year.

Recent research by Knight Frank showed prime central London house prices fell by 1.5 per cent in July as compared to the same month last year.

Countrywide said the Brexit vote had "unsettled the UK economy" due to the uncertainty surrounding the terms of Britain's new relationship with its European neighbours.

"We expect a weaker economy and for this to affect house prices and transactions through consumer confidence, household incomes and the labour market," Countrywide said.

The forecast comes after it emerged house prices were being cut by nearly 10 per cent in high-end parts of London such as Kensington and Chelsea.

Over a third of homes - 35.2 per cent - have had their price cut in London's most expensive borough, with reductions averaging 9.2 per cent, according to data from Zoopla.

Read more: House prices are being cut by nearly 10 per cent in some parts of London

The introduction of a higher stamp duty rate on second homes has reduced deterred landlords in many parts of London.

In addition, Countrywide said "after several years of double-digit price growth, expectations of future capital gain have weakened in many areas leading to reduced demand."

Fionnuala Earley, Countrywide's chief economist, said: "Forecasts in the current environment are trickier than ever as the vote to leave the EU has thrown up many risks.

"Not all of the corrections are due to the vote to leave the EU. Stamp duty and weaker house price growth expectations, particularly in London's prime markets, have a part to play. There are supports to prices on the supply side from the continuing mismatch of supply.

"On the demand side, ultra-low interest rates and the significant discounts available to overseas buyers resulting from the fall in sterling will help support prices too."

Related articles