A no-deal Brexit on Halloween could cause house prices to fall by between 5.4% and 7.5% across the different UK regions in 2020.
Accountants KPMG’s Outlook for UK House Prices predicts that if the UK exits on 31 October with a deal, we expect house prices to stabilise in 2019 and to rise by 1.3% in 2020.
The UK’s housing market has been stuck in the slow lane since 2016,says the report with annual house price growth slowing to 0.9% in June,2019, from a rate of 8.2% three years previously according to data from the Land Registry.
Changes to stamp duty introduced in 2014 and 2016 – which raised the costs for buyers of highervalue homes and second properties – and the uncertainty of Brexit, have put the market on the back foot.
“Overall, while our forecast represents a plausible response of house prices to the shock of no-deal, the overall impact is highly uncertain. It is possible that the demand for housing is further affected by a fall in confidence, with homebuyers becoming ever more reluctant to commit to house purchases over the coming year.”
Since the start of the 1990s, the UK has suffered two major house price corrections. The first took place in the early 1990s,linked to the recession in 1991, when house prices for the UK fell by 20% between 1989 and 1993.
The other major house price drop occurred during the global financial crisis in 2008.
The most abrupt yearly falls during these periods were in 2008,when house prices fell by 15%, and in 1990, when prices fell by 11%. While we expect the correction to be milder this time,a further shock to buyer confidence could tip the overall market into a much deeper slump.