UK house prices could drop by as much as 20 percent if Britain crashes out of the European Union without a deal on October 31, new research warns.
The analysis by KPMG found that housing markets in London and Northern Ireland would suffer the most, but that house prices would likely fall by around 6 percent across the whole of the UK in 2020 if there was no Brexit deal.
KPMG said that in a worst case scenario, “more severe falls of around 10-20 percent [are] also possible if we look at historic precedents”.
“Buyers are taking a cautious approach to purchasing decisions, with many opting to wait for a resolution to the Brexit saga.”
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Jan Crosby, UK head of housing at KPMG, said that Britain leaving without a deal would likely lead to a fall in sales volumes, which would in turn would “make government housing delivery targets impossible to achieve and slow new building across the sector”, he said.
Where will the best bargains be found?
According to KPMG, property prices in Northern Ireland and London will fall the most.
Londoners could see the value of their home slashed by almost £55,000 ($105,000) on average (from £476,000 in 2018 to £422,000 in 2020) in the case of a no-deal Brexit.
House prices in Northern Ireland, which is more heavily reliant on EU trade than the rest of the country, could fall by 7.5 percent in 2020.
Homeowners in the North West of England and Scotland are likely to remain relatively protected from the downturn. These regions are predicted to be the only two where prices would end 2019 higher than the year before, with modest rises of 0.3 and 0.7 percent.
However if there is no deal, this will reverse next year, as all regions of the UK are expected to record house price falls of around 6 percent or more.
Savills' head of residential research, Lucian Cook told the UK Telegraph that a no-deal Brexit would likely result in interest rates staying lower for longer, improving affordability for buyers and potentially increasing demand.
He also said that the falling value of sterling could create a “once-in-a-lifetime opportunity” for overseas buyers to pick up a bargain in central London.
But worst is over for Australia
While the UK prepares for the worst, Australia's housing market slump appears to be over, with property prices in Sydney and Melbourne rising for the third month in row.
Figures from property analysts CoreLogic showed Sydney's median apartment price surging 1.8 per cent last month and the median house price up 1.5 percent, with the auction clearance rate back up to 78.9 percent.
Melbourne apartment values rose 1.5 percent over the same period, while the city house prices jumped 1.3 percent - marking the steepest rise since April 2017.
CoreLogic research director Tim Lawless said: "The significant lift in values over the month aligns with a consistent increase in auction clearance rates and a deeper pool of buyers at a time when the volume of stock advertised for sale remains low."
"It's likely that buyer demand and confidence is responding to the positive effect of of a stable federal government, as well as lower interest rates, tax cuts and subtle easing in credit policy.
"While the recovery trend is still early, it does appear that growth trends are gathering some pace, particularly in the largest capital cities."
