The latest statistics have been revealed about the consequences of whether Prime Minister, Boris Johnson, manages to leave the European Union on October 31st with or without an agreed deal.
According to the latest report produced by KPMG, if the country leave the EU without agreeing on a deal, then housing with in the UK could see a drop of around 6.2% in 2020.
KPMG predicts that that with a no-deal Brexit, Northern Ireland will see the highest fall of around 7.5% in the housing market. Whereas Wales and the East Midlands will receive the lowest drop of around 5.4% in 2020. Within the capital, KPMG estimates a price fall of 7% in and around London.
Although, KPMG also state that is a deal is finally reached, the housing market will rise by 1.3% in 2020. Within the KPMG report, it states that if there is a deal, Northern Irish and London housing will still see a decline in 2019. With Northern Ireland predicted 1.2% and London to drop by 4.7%.
However, from a deal, other regions in the country are likely to stay relatively similar to their current housing prices. Scotland and the North West have been estimated to have the biggest growth from Brexit in 2019. If a deal is agreed, housing in prices in Scotland will rise by 1.4% and within the North West there is a predicted 1.6% growth.
Overall, examining all the statistics drawn from the KPMG report, it shows that there will be a short-term dent in property values if there is a no deal Brexit. However, it may only make a small impact on the fundamental factors driving the market such as the stock of regional housing.
In the report it also said, “House builders 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 most ground in the long run.”.
Additionally, comparing these statistics to the aftermath from the 1991 recession, mortgages are much cheaper. In 1991, prices dropped around 20% for a four-year period. Also, around that time, the base rate for a mortgage from the Bank of England was around 14%.
The main outlook from the report states “the type of exit will impact the fortune of house prices in the UK in the medium term”.