Another warning by the Governor of the Bank of England Mr Mark Carney. The bank took the view that a no deal Brexit could be worse for the UK property market than the recession of recent years.
London’s will be hardest hit
The latest report from the Property investment platform “British Pearl” believes that house prices in London’s commuter belt may be hard hit in the event of a no-deal Brexit, as it is home to some of the most polarized property markets in the England.
The British Pearl report found the average detached house in Stevenage cost 197% more than the average flat (£553,697 versus £186,422). This was the fifth largest gap anywhere in the UK and has grown by 68.2% in the last 5 years.
The combination of these two measures makes the Hertfordshire town the most polarized property market in Britain, followed by Watford, Bedfordshire and Hastings.
The price gap between flats and houses in Watford has grown by 53.2% over the same period, to 201.4%, while, in Hastings, it has widened by 63%, to 184.7% respectively.
This latest warning comes after BoE Governor Mark Carney warned that a no deal on Brexit could mean the pound weakening considerably and in turn trigger a recession that would be worse than the banking crisis.
Should this happen the prospects for rapid depreciation in the UK vary considerably between different regions. British Pearl in its report used the two measures used above to rank the UK’s towns and cities. British Pearl identified where investors and buyers would be more likely to see a market downturn result in property prices falling rapidly.
The British Pearl report will enlighten landlords, homeowners, and property investors, who won’t want to invest in property before a conclusive deal on Brexit.
The average variation in price across the UK is currently 50.6%, which has grown by 24.2% in the last 5 years.
The other end of the spectrum was Doncaster, where the average price of a detached house was 140.6% more than the average flat, while the gap between prices over the past five years rose by just 18.4%.
Doncaster was followed by Stoke-on-Trent, with a price gap of 131.2%, which has grown by 26.9%, and Blackpool, where prices were 153.9% apart, after widening by 12.3% in five years. Blackpool property prices have been depressed for the last 10 years and not shown before now any real growth.
Mr James Newbery at British Pearl, commented: “Parts of the UK property market have made considerable gains, and the relative value of homes in different price bands now poses a serious risk to homeowners and investors in the run-up to March 2019.
“The fallout from no-deal is most likely to be felt hardest in the capital’s commuter belt, where markets have moved too far and too fast. That is bad news for both ordinary investors and homeowners, particularly those who have borrowed to make their purchase.”
He adds: “However, the study also shows being diligent about the area you buy in can help you avoid these increased risks, with huge variations being seen in this polarization measure across the country.”
Source; The BLA – Chris Hanson
3rd of December 2018