Housebuilding to slow down
Price of homes to fall if UK crashes out of EU with No Deal
Prices and volumes could plummet , say analysts (pic: Terry Murden)
A No Deal Brexit could see prices of homes in Scotland fall by 6%, with a drop of 10-20% not out of the question, according to new research.
There is a further warning that house building could slow down, denting government targets.
However, if Boris Johnson secures a deal house prices are expected to grow by 1.4% in 2020.
The sharpest falls in house prices following a No Deal Brexit would be in Northern Ireland (7.5%) and London (7.0%).
The data was compiled with statistics from the Land Registry, and as part of KPMG’s Economic Outlook research, which uses a suite of external and in-house models capturing the main inter-relationships in the UK and world economies.
Jan Crosby, UK head of housing at KPMG, said: “While No Deal could dent property values in the short-term, it doesn’t detract from the fundamental factor driving the market – the lack of regional housing supply.
“Sales volumes will likely fall much more than prices – making government housing delivery targets impossible to achieve and slowing new building across the sector.
“Also, the level of leverage in the housebuilding sector is much lower – meaning that volume housebuilders will be under less pressure to materially reduce prices, which helped to create the downward spiral of prices in the global financial crisis.”
Predicted house price growth in No Deal scenario
Predicted house price growth with a Deal
Predicted average house prices by end of 2020
Accountants favour single market option
A survey of members of ICAS (The Institute of Chartered Accountants of Scotland) finds the preferred Brexit outcome for 60% is for the UK to remain in the single market. However, only 6% believing that this outcome is likely.
The autumn Brexit tracker has found that CAs are increasingly of the opinion that the UK will be left without a free trade deal with the EU 27.
The survey also found that 75% said their organisation is “quite” or “very” prepared for a negotiated Brexit; while 48% say they are prepared for a “no-deal” Brexit.
When CAs were asked where they go to for useful advice on Brexit, theyresponded that they find “colleagues and friends”, trade and professional bodies, external advisers and the media more useful than local or UK government.