London house prices will recover after their Brexit wobble, experts have promised

Emma Haslett
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A park in central London
London house prices will be less weak than originally expected, according to RICS (Source: Getty)

London house prices may have been disappointing in recent months, but things are about to look up, according to the Royal Institution of Chartered Surveyors (RICS).

Figures published this morning suggested sentiment in London's residential property market was showing "signs of improvement", with sales expectations moving into positive territory and price expectations stabilising in August.

Read more: Berkeley Group has suspended construction on this high-end London development

Some 30 per cent of surveyors in the capital said prices had fallen rather than risen in August - although the net balance of those who expected London prices to hold steady over the next three months rose by three percentage points.

Considering in July, 23 per cent more surveyors expected a fall rather than a rise, that's quite a recovery (and in the meantime, prosperity outside London has risen...).

Meanwhile, the organisation's agreed sales indicator moved to minus 16 per cent in August, from minus 42 per cent - and sales expectations improved "significantly", with the strongest reading since January.

That said, new buyer demand in the capital decreased, with 16 per cent more surveyors reporting a drop in August.

“There are clear signs that the housing market is settling down after the initial surprise of the outcome to the EU referendum," said Simon Rubinsohn, RICS' chief economist.

"Buyer enquiries did dip again in August but only modestly, and more significantly, sales expectations are beginning to edge upwards once again. It is likely the swift response from the Bank of England, both in terms of the lowering of the capital buffer and the cut in interest rates, has played a role in helping to support confidence.

“The more assured mood is also reflected in some of the longer term RICS indicators although this in itself could serve to re-ignite ongoing concerns surrounding affordability with five year projections for both prices and rents in the latest survey back to their highest level since May.”

The figures come in stark contrast to a report published by UBS last month, which suggested house prices could fall by five per cent following the Brexit vote. But after a wealth of encouraging economic data in recent weeks, it seems reports of the UK economy's death are greatly exaggerated...

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