Brexit will stop the growth of London house prices in 2017 with an expected sales slump to follow, new research has found.
Property firm Savills predicts that Brexit uncertainty will put the brakes on four years of house price increases ushering in a period of flat house prices as Britain triggers formal negotiations to leave the European Union.
London house prices are expected to increase by 7 per cent this year but will remain flat in 2017, it is claimed.
Savills predicts a 16 per cent decrease in transactions to just over 1 million in 2018.
Lucian Cook, head of residential research at Savills said: "A realisation that Brexit feeds into the wider economy, people's prospects for earnings, people's prospects for employment and then that beginning to filter through into the hard economic reality ... is likely to make buyers more cautious,"
The report also forecasts that the flat property market will put more pressure on the rental market causing rents to increase.
Meanwhile, average London rents are precicted to increase by 24.5 per cent by the end of 2021, compared to a 19 per cent increase in the rest of the country.
This will make life even harder for young people living in the capital, where getting on the housing ladder is particularly difficult.
The renewed pressure on rental prices will be caused by would-be first-time buyers being forced to rent as housing market conditions get tougher as well as recent tax changes for buy-to-let investors, which may put investors off buying rental properties and suppress the levels of homes in the private rented sector, according to Savills' predictions.
Savills expects house price growth to be largely flat over the next two years as Brexit negotiations leave home buyer sentiment "fragile".
But expectations that interest rates will remain low for some time yet, keeping borrowing costs cheap, should prevent house prices from falling across the country generally, it said.
Despite the gloomy predictions, the average property value in London, currently £481,000, and is expected to increase by 11 per cent over the next five years.
That means the average property in the capital by the end of 2021 is expected to be worth £533,400.