Britain’s decision to quit the European Union could boost property values in Belgravia and other areas of prime central London.
The Bank of England is likely to reduce its base rate from its current record low of 0.5% in the summer, according to Governor Mark Carney.
In a speech at the Bank’s Threadneedle Street headquarters, Mr Carney said: “In my view, and I am not pre-judging the views of the other independent Monetary Policy Committee members, the economic outlook has deteriorated and some monetary policy easing will likely be required over the summer.”
His announcement sent the pound sharply down against the dollar as financial market traders responded to the news of the stimulus.
This makes property in London cheaper for overseas investors who use currencies with values based on the US dollar to fund their investments.
Mr Carney also suggested that a move to lower the cost of borrowing could come as early as July.
“The MPC will make an initial assessment on 14 July, and a full assessment complete with a new forecast will follow in the August Inflation Report,” the governor revealed. “In August, we will also discuss further the range of instruments at our disposal.”
If the bank’s base rate does fall, UK-based investors using a mortgage to fund their central London property purchase will be able to access cheaper home loans.
Mr Carney said the result of the EU referendum was a “major regime shift” that would have far-reaching economic effects.
However, the Governor sought to calm households and businesses about the pain of the transition.
“The UK can handle change” he said. “It has one of the most flexible economies in the world and benefits from a deep reservoir of human capital, world-class infrastructure and the rule of law. Its people are admired the world over for their strength under adversity. The question is not whether the UK will adjust but rather how quickly and how well.”
For more information, click on the link below