A leading accountancy firm has warned that British house prices could fall if the UK leaves the EU without a deal in October.
According to KMPG, although house prices should ncrease once the Brexit uncertainty has lifted and a deal has been agreed, but a no-deal could see house prices fall by around 6 per cent in 2020, with a drop of 10-20 per cent not out of the question.
Should a deal be agreed, and Brexit pass relatively smoothly, KMPG expects to see a rise in the overall pace of house price growth to then accelerate to 1.3 per cent in 2020. Yorkshire and the Humber is expected to see the fastest growth in 2020, with prices expected to rise 2.4 per cent. Meanwhile, house prices in London will continue to fall in 2019 and 2020, with the sharpest drop of 4.7 per cent expected this year.
However, the research finds the initial impact of a no-deal on the property market could see a house price decline across every region in 2020, with the sharpest fall (7.5 per cent) seen in Northern Ireland, followed by London (7 per cent).
“The housing market has been stuck in the slow lane since 2016 – with the changes to stamp duty and the uncertainties of Brexit putting the market on the back foot,” said Yael Selfin, Chief Economist at KPMG UK. “As our forecasts show, a no-deal Brexit will see house prices decline significantly across the UK in 2020 by an average of 6.2 per cent, with more severe falls of around 10-20 per cent also possible if we look at historic precedents.”
According to the analysis, the average house price in 2020 is expected to be lower under a no-deal Brexit across all UK regions. In the case of London, it finds that if Brexit goes smoothly, an average property will cost £453,000 but in the event of a no-deal, this would drop to £422,000 – while the rest of the regions would see a smaller difference.
Article published 3rd September 2019