Leading accountants KPMG have issued a stark warning on the effects of a no-deal Brexit on UK property prices.
In a report published on Monday, the firm says house prices across the country could drop by 6.2 percent in 2020 if the UK exits the European Union on October 31 without a withdrawal agreement in place.
London and Northern Ireland would be the regions most affected by no deal, says the report, which predicts regional house price falls of between 5.4 and 7.5 percent across the UK.
However, if Prime Minister Boris Johnson can secure a new withdrawal agreement with the UK’s EU partners by October 31, KPMG predicts a positive uplift in house prices in 2020 by an average 1.3 percent.
All eyes are on Parliament this week as MPs and peers return after the summer recess with less than eight weeks until the Brexit deadline and with the Government having asked the Queen to prorogue – or suspend – Parliament until October 14.
The economic uncertainty of the UK’s departure from the EU can be seen in the property market.
But KPMG’s report also suggests that the lack of stock coming on to the property market will have as big an effect as Brexit. With fewer properties for sale and fewer newbuilds being completed, demand remains high.
Jan Crosby, UK head of housing at KPMG, said: “Transactions volumes will likely fall much more than prices, making government housing delivery targets impossible to achieve and slowing new building across the sector.”
The accountancy firm’s report said buyers were being cautious about whether to buy or not, with many decided to wait to see what happens with Brexit before committing to a property purchase.
It noted: “Overall, while a no-deal Brexit could dent property values in the short term, it may make less impact on one of the fundamental factors driving the market: the stock of regional housing.
“Housebuilders are expected to reduce the supply of new housing in some regions in the short term as a response to a deteriorating economic outlook.
“So, while there will be fallout from the initial economic shock following a no-deal Brexit, the market is expected to recover more ground in the long run.”
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