House prices could fall by a third in the event of a no-deal Brexit, the Bank of England warned yesterday as it outlined the possibility of a housing crash.
The Bank warned that if Prime Minister Theresa May fails to get her Brexit deal past Parliament, it could result in the worst economic fall since the second world war.
In its analysis, the Bank also said that unemployment could skyrocket by 7.5%.
The Bank added that in another Brexit scenario, of a disruptive Brexit where there is no change to border trade or financial markets, GDP may fall 3% from its level in the first quarter of 2019.
In this scenario, the unemployment rate would hit 6% and inflation rises to 4%.
House prices would decline 14% and commercial property prices fall 27%.
The pound would fall by 15% against the US dollar.
A similar scenario has been modelled by the Bank previously but yesterday’s warning seemed more explicit.
Agent Guy Bradshaw, of Sotheby’s International Realty, accused the Bank of “scaremongering”.
Last night he said: “It is unlikely we will be walking away from the EU without a deal so this scaremongering is doing nothing to help a market which is already stagnating under punitive stamp duty costs as well as political and economic uncertainty.
“The biggest driver for London’s prime property market next year will undeniably be foreign investment by individuals looking to hedge their bets with the good currency play.
“Already this evening we have spoken to a handful of American investors who have proactively reached out to us following the BOE’s announcement.
“With the exchange rate potentially offering US buyers a 25% discount on properties this could be one of the smartest times to invest in London.”
Parliament is set to vote on the Theresa May deal on December 11.