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Brexit to ‘plunge property market into a Darwinian future of victims, survivors and predators’

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Jonathan Hopper, managing director of the buying agents Garrington Property Finders, has highlighted the irony of London voting resoundingly to remain in the EU, but then seeing its property market decapitated by a victory for the Leave camp.

“Prime central London property has already suffered more than any other market from the uncertainty unleashed by the referendum,” says Hopper. “With a quarter of the capital’s corporate rental market driven by the financial services sector, the convulsions being experienced in the City today will filter down to the property market within days.

“Looking further ahead, the only sure thing is that we can’t be sure of much. The actual process of Brexit is unlikely to be quick or easy, but it’s the prolonged period of uncertainty that will accompany it that is likely to prove most toxic.

“The blunt truth is that many investors – for whom property is a discretionary purchase – will sit on their hands until the dust settles. And no-one really knows how long that will take.

“Optimists will point to the collapsing Pound as a potential plus. London property will certainly become cheaper for overseas investors, but buying property is not like buying a holiday. No-one makes a long-term financial decision purely because of a favourable exchange rate.

“In any case, the successive hikes in stamp duty on high value investment properties will cancel out much of the benefit that Sterling weakness might bring to foreign buyers.

“As a result the Prime central London market risks a triple whammy of falling demand, supply and prices.

“Looking outside London the impact will be less dramatic, but the uncertainty will do little to unblock the supply shortage. Would-be sellers will be more likely to stay put, and this morning’s collapse in the share price of Britain’s largest housebuilders hints at a freeze in new building.

“In normal times constrained supply might drive up prices. But these are far from normal times, and a softening in prices is all but inevitable. The property market is likely to make a cry for help – and the new prime minister will face growing calls to reverse the stamp duty raises.

“Without renewed stimulus, Britain’s property market faces a ‘hard reset’ and a Darwinian future of victims, survivors and predators.

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