Macroeconomic and Demographic Determinants of London Housing Prices: A Pre- and Post-Brexit Analysis

This study examines the demographic and macroeconomic factors influencing housing prices in London from Q3 2014 to Q4 2022, focusing on the pre- and post-Brexit referendum periods. Using multiple regression analysis, the research evaluates the impact of interest rates, inflation, construction costs, population changes, and net migration on the housing price index (HPI) across various market segments. The findings suggest that interest rate base rates, consumer price inflation, and construction output price indices were significant predictors of housing price fluctuations. Notably, cash purchases exhibited the strongest explanatory power due to a reduced sensitivity to market changes. Additionally, London’s population was a key determinant, particularly affecting first-time buyers and mortgage-backed purchases. These results contribute to a deeper understanding of the London housing market and offer insights into policy measures addressing housing affordability and investment dynamics.