Brexit vote sees demand fall in London's top-end property market

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Buyer demand across London's top-end property market fell to its weakest levels in at least two years following the Brexit vote, according to an index.

The report from eMoov.co.uk said the £1 million-plus property market in the capital is showing signs of "feeling the strain of the decision to leave the EU". 

The prime central London index found demand for homes valued at £1 million-plus fell back by 10% between May and August to the lowest levels since it started monitoring the data in 2014.

Demand for homes in this bracket was found to be particularly low in Mayfair, St John's Wood, Knightsbridge, Belgravia and Fitzrovia.

Some parts of prime London - including Holland Park, Notting Hill and Primrose Hill - saw uplifts in buyer demand compared with three months earlier. 

The report said: "Although the wider UK market is yet to suffer any detrimental Brexit impact, it seems London's £1 million-plus property market is feeling the strain of the decision to leave the EU."

Russell Quirk, founder and CEO of eMoov.co.uk, said: "These areas of London rely heavily on high-end foreign investment and second-home visitors to survive.

"Whilst the rest of the UK market seems to be ticking along with little impact as of yet, the immediate weakening of the sterling and negative response from the rest of the EU seems to have had an instantaneous knock-on effect on the prime central London market."

Some other reports have suggested falls in the pound may start to encourage foreign investors to buy more London properties as they will appear relatively cheap.

The Centre for Economics and Business Research (CEBR) recently said the top end of the London housing market, which has attracted strong interest from foreign investors in recent years, was "showing cracks well before the vote on June 23".

A stamp-duty hike for people buying second homes, including buy-to-let investors, was imposed on April 1 and there were signs this disrupted the market, with investors rushing to complete deals before the tax increase.

CEBR expects house prices in London generally to increase by 6.8% across 2016 and although prices in the capital are predicted to fall in 2017, they are expected to return to growth in 2018 and beyond.

The forecaster has predicted the average UK house price will be about £40,000 higher than it is now in five years' time - despite the economic uncertainty caused by the Brexit vote.