Brexit and the London housing market: Scenario modelling

In this Special report, we investigate whether the recent weakness in London’s housing market is more symptomatic of a weakening demand – both for homeownership or investment purposes, following the Brexit referendum for instance – or rather of a conjunction of supply-side factors, such as recent efforts to bolster construction output and macro-prudential policies to tame credit practices in the era of prolonged accom m odative monetary policies . Then , we explore different scenarios and model different house price developments that could arise in the immediate aftermath of Brexit via different channels: i/ monetary policy , ii/ net migration from the EU and iii/ real effective sterling exchange rate . Regar dless of the outcome ahead, we remain extremely bearish on the London residential property market, for which we fore see no support in the near- to medium-term.