London House Prices at Risk of Declining, Deutsche Bank Says

London house price pressures are set to moderate and valuations may even decline, according to Deutsche Bank AG.

Weak growth in the global economy, sterling strength, falling oil prices and the withdrawal of Bank of England stimulus are all potential drags on demand for homes in the U.K. capital, George Buckley, Deutsche’s chief U.K. economist, said in a report sent to clients yesterday.

“There seem to be more downside than upside risks to London housing going forward,” Buckley said. “While we do not expect a crash in London property prices, we do expect price pressures to ease going forward and would not be surprised to see outright falls in asking prices.”

While values in London are 30 percent above their previous peak in 2007, they rose at their slowest pace in 15 months in June, the Royal Institution of Chartered Surveyors said July 10.

London may still prove resilient, in Buckley’s opinion, given a lack of supply, population growth and the chance rising house prices can become entrenched for a prolonged period.

“Whether the London boom turns out to be a bubble depends on how resilient the supportive factors” prove, Buckley said.

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