House prices could fall by 20% in wake of no-deal Brexit - KPMG

New analysis by KPMG revealed the potential for a decline of around 6.0% in UK house prices in 2020 after a no-deal Brexit with scope for a drop of as much as 20% depending on how exactly economic agents reacted.

The UK property market was in a vulnerable state with the consultancy finding that the average price of a home could fall by between 5.4% and 7.5% depending on the region, although declines of 10% and even 20% could not be ruled out.

House price growth across Britain had decelerated since the 2016 referendum, an unexpected fillip for first-time buyers, but more generally buyers had been spooked resulting in a drop in transactions.

“Buyers are taking a cautious approach to purchasing decisions, with many opting to wait for a resolution to the Brexit saga,” KPMG said.

The biggest falls would hit in London and Northern Ireland as they were areas are more reliant on trade with the EU.

KPMG estimated that house prices could fall by 7.5% in Northern Ireland and by 7% in London, primarily because they are more reliant on trade with the EU.

Average house prices in London could fall from £453,000 to £422,000, although they would remain the highest in the country.

On the other hand, if a deal were reached, KPMG predicted that house prices nationwide would will rise by 1.3% during the following year.

But even if a deal is struck, prices in London and Northern Ireland were still seen falling in 2019, by 4.7% and 1.2%, respectively, although Scotland and the North West could see gains of 1.4% and 1.6%.

Jan Crosby, the UK head of housing at KPMG, said a no-deal withdrawal would lead to a sharp drop in sales volumes as homeowners would remain spooked.

Crosby warned that this would “make government housing delivery targets impossible to achieve and slow new building across the sector”.

Yael Selfin, the chief economist at KPMG UK, said: “Even if Brexit can be resolved relatively smoothly, the travails of the global economy will impact growth in the UK, making prospects for house prices relatively subdued."