Premium parts of central London such as Chelsea have seen the clearest drops in real estate prices. Stephen Colebourne/Flickr

But don’t expect the city to become affordable any time soon.

Is London’s great home price correction finally happening? The U.K. capital’s housing market has been notoriously unaffordable for years, but in the immediate aftermath of the Brexit referendum, there are some hints that things are about to change.

This week, the London media reported that thousands of home sales have fallen through within the past month. According to reports in The Standard, some real estate agencies are admitting that as many as two-thirds of the offers they were negotiating at the time of the June 23 referendum have since fallen through or been renegotiated, with central London prices falling 12 percent in just a month. Comments from Britain’s biggest rental and estate agent group, Countrywide, confirm that these London agents are not experiencing an erratic blip. In a new report sent to CityLab Thursday, Chief Executive Alison Platt said that from April onwards, Countrywide saw “a slowdown in [their] retail and London residential businesses and, since the E.U. referendum result this has become more marked in London, the South East and expensive prime markets. The rest of the country has fared somewhat better[.]”

After years and years of climbing, many people are hoping—and some people no doubt fearing—that this is the start of a major shift. If things do change, however, it may not be for long. According to an analysis released Thursday by the Centre for Economics and Business Research, London will still see an overall home price rise this year of 8 percent, much of it powered by market conditions from before the referendum. In 2017, however, prices are expected to drop 5.6 percent, and then in 2018, CEBR is predicting that home prices will go back up.

Even that short blip may do little to bring buying a home within the average Londoner’s reach. Last year, a first-time buyer in London needed to earn £77,000 ($101,099) a year to afford the average cost of a starter home, in a city where the average annual wage was just £27,999 ($36,762). To be affordable on the average salary, London house prices would thus need to drop by almost two-thirds without any corresponding fall in wages—a highly unlikely turn of events. In fact, since the financial crisis of 2007, Britain has seen a 10.4 percent drop in real terms wages, the worst showing (albeit neck and neck with Greece) in the entire group of OECD countries. There is at present no evidence to suggest this trend will be reversed.

Other factors may also help to keep London housing unaffordable. Since the referendum, U.K. construction firms have lost up to 40 percent of their value, liable to make even companies in relatively good financial health less willing to build in a volatile market, thus exacerbating London’s housing shortage.

It’s nonetheless still too early to say what the long-term effects of the referendum will be on London housing, because we still don’t know what direction government action will take. A lot depends on whether any Brexit deal allows for or cancels freedom of movement between the U.K. and the E.U.’s 27 remaining members. A predictive report from May suggested that ending freedom of movement could, by reducing demand—i.e. forcing people to leave—have an effect in reducing prices for both buyers and renters. It could at the same time produce a counter-effect, as international investors withdraw from investing in London homebuilding, thus limiting supply. Despite current market jitters, it seems that the only thing that’s really certain in the near future for London’s housing market is uncertainty itself.

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