Brexit talks uncertainty may see short sharp property prices drop, says study
The UK property market could see a "short sharp" adjustment as uncertainty mounts during Britain's Brexit negotiations, according to a report.
The study by property investor M&G Real Estate said capital values could fall by around 10%, but any drop would be short-term.
It said anecdotal evidence suggested overseas buyers were looking to take advantage of the collapse in the value of the pound to 31-year lows since the Brexit vote.
" Indeed, Brexit appears to largely be a domestic concern, with overseas investors continuing to target the UK and viewing London as a global safe haven," it said.
"The outlook predicts that the market will see a short, sharp - but not catastrophic - adjustment in pricing as investors build an uncertainty premium into the property market."
The study said Britain's property market was in a stronger place to tackle the economic and political uncertainty than during the 2008 financial crisis.
The update comes after the Bank of England warned on Monday that the commercial property market is at risk of a ''sharp adjustment'' and foreign investment is on the wane in the wake of Britain's decision to quit the European Union.
The minutes noted that commercial real estate transactions slowed by 60% in July and August compared with the same period last year, dropping to their lowest level since 2009.
Commercial real estate values dropped by 2.8% in July, and by a further 0.7% in August.
The Financial Policy Committee remarked that prospects for the sector have weakened, with external forecasters expecting an average 10% drop in prices by the end of 2017.