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Brexit could cause ‘significant’ London house price tumble, according to UBS

Any sustained UK economic recession brought about by Brexit could see a significant decline in London house prices, according to new figures released by UBS.

The financial services firm ranked the capital second in a list of world cities most at risk of a property bubble, behind only Vancouver in Canada.

In its Global Real Estate Bubble Index, UBS warned that a severe recession, potentially brought about by the UK leaving the European Union, could halt the ‘unsustainable growth’ in house prices which are currently boosted by ready access to financing liquidity and tight supply.

With house prices in the capital increasing 50% in the last three years when adjusted for inflation, London joins the likes of Hong Kong, Stockholm and Sydney as property markets most at risk of a bubble.

In a statement for Bloomberg, Claudio Saputelli, Head of Global Real Estate at UBS Wealth Management’s chief investment office, said ‘excessively low interest rates’ for the cities in question were helping to sustain booming property markets.

He commented: “What these cities have in common is excessively low interest rates, which are not consistent with the robust performance of the real economy.

“When combined with rigid supply and sustained demand from China, this has produced an ideal setting for excesses in house prices.”