Property experts are predicting a 1-in-3 chance of a London house price crash if Britain leaves the EU without striking a deal
House prices in London could tumble if Britain leaves the European Union without striking a deal, according to a Reuters poll of real estate specialists.
The average data from a poll of 30 property analysts revealed that prices in the U.K. capital are expected to fall by 1.6 percent this year and 0.1 percent in 2019.
However, the more startling find was that among respondents there existed a one-in-three chance of a “significant correction” in London house prices by the end of next year. One analyst even predicted the likelihood of a coming crash at 75 percent.
In August, the average asking price for a home in London was £609,205 ($785,336). The average salary in the city in 2017 was £39,476, according to the U.K.’s Office of National Statistics (ONS).
According to the report, respondents to the survey noted that overseas buyers are being put off by Brexit uncertainty, despite sterling’s relative weakness. The British pound is hovering at around one-year lows versus both the euro and U.S. dollar. When asked to rate the level of London house prices on a scale of one to 10, where one is extremely cheap and 10 is extremely expensive, the median response was nine.
Investment analyst at Thomas Miller Investment, Dan Smith said in a note on Wednesday that the housing market in the U.K. remains divided, with London and parts of southeast England witnessing price falls, while the rest of the country looked “relatively buoyant.” The broader momentum in the U.K. housing market is continuing to slow as affordability and a lack of houses for sale slow activity. A stodgy property market and the recent “binge” on credit card borrowing presented the biggest risks to the U.K. economy
The average U.K.-wide asking price for a home was £301,973 in August and the panel of analysts tipped prices nationally to rise 2 percent this year and next.
The Bank of England (BOE) pushed its benchmark interest rate up to 0.75 percent in August but has signaled the pace of rate rises will be slow. Higher rates of interest have a depressing effect on property value as the cost of borrowing is increased.