LONDON: London's seven-year housing boom may be about to end after the U.K. voted to leave the European Union.

“While in recent stress tests, the major U.K. banks were assessed with declines of around 30 percent in commercial real estate prices, we fear that London residential could experience an even more severe downturn,” Societe Generale analysts including Marc Mozzi wrote in a note to clients on Monday.

“Brexit will damage the U.K. economy, and some companies will almost certainly have to relocate parts of their business to retain access to the EU single market.”

Home values across the capital were already being hurt before the vote, with prices decreasing 1.4 percent in May, the biggest monthly decline since June 2011, according to data compiled by Acadata Ltd. and LSL Property Services Plc.

The number of prime properties sold in London in the 12 working days after the referendum fell 43 percent from the same period a year earlier, according to data compiled by researcher Lonres.

The number of homes under offer dropped 25 percent.

“We do expect the recent rebound in real estate stocks may ultimately turn out to be just a ‘dead cat bounce’,” the Societe Generale analysts wrote.

Commercial property values in the U.K. may fall 25 percent from their peak on rent declines and could fall further if concerns about frozen property funds spread, they forecast. - Bloomberg