House prices could crash by a third in no-deal Brexit, warns Bank of England

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.

 

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36 Comments

  1. JonnyBanana43

    Carney – he’s told us this before EYE.

    Look at what he said after the vote – that was completely discredited. Absolute nonsense.  Project fear.

    Housing is simply supply and demand economics – if anything a no deal would bring more houses to the market, which would be good for us agents and for the punters.

    Go back to bogus monetary policy Carney and stop trying to interfere.  

     

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    1. surrey1

      If punters have less money (accepted by just about every credible study) then invariably there’ll be less demand. More houses to sell means more supply. Hence his assertion prices will fall.

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      1. JonnyBanana43

        By 30% obvs. 

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    2. george

      Doesn’t anyone understand it is just a planning scenario. He advised that it was the remotest scenario.Hasn’t every agent modelled a scenario of a 100% price hike with RM

      or overnight RM have no data.

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      1. P-Daddy

        Correct George. This is one of 3 scenarios…and is based on stress tests of the banks. Back to your day jobs folks, nothing to see here or anything that you can influence. Leave it up to the angry of the internet.

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  2. Millicent Bystander

    I believe Paul the Octopus had a better success rate in making predictions than Mr Carney…#justsaying

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  3. AgencyInsider

    What is not in any doubt is that in any modelled scenario, post-Brexit this country will not be as economically strong as it would be if we had stayed in the EU. Every single one of us will be less well off.

    There are those who think that is a price worth paying. For the sake of my children and their children, I don’t.

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    1. AgentV

      We are the only country on the planet thinking about walking away from the largest market in the world while simultaneously imposing economic sanctions on ourselves.

      The only supposed benefit of that is the end of freedom of movement…..so although we will have less people coming to work here, we will also have less freedom of travel ourselves.

      And we will all be poorer!

      Just great!

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      1. JonnyBanana43

        Free trade under WTO rules will open us up to the largest market in the world. 
        Thank goodness we’re leaving the corrupt, tariff laden, self centred EU. 
        The EU is over anyway. Best to get out, while we can! 

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        1. AgentV

          So which countries in the world do we not currently trade with, that are about to become our golden ‘Unicorn’ (even though they probably have most of their own sufficient existing arrangements in place) replacing the largest single market in the world?

          And which part of WTO rules is tariff and rule free?

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      2. Property Pundit

        #delusional

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        1. AgentV

          Is that the best you can do…….call people things?

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    2. AgencyInsider

      5 likes. 5 dislikes. Well, that’s about the proportion I would expect on a national 48%/52% split…

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  4. Woodhen

    Project fear at its worst level yet

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  5. rsvstu97

    Carney the new mystic meg. The establishment closing ranks. As for the contributor who said we’re guaranteed to shrink the economy under any Brexit what are you? Carney’s protege? You have absolutely no evidence to assert that either way. Your children will have to work harder assuming they notice any difference at all.

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    1. AgencyInsider

      I rather think rvstu97 that you are the kind of person who will shout down anyone who fails to 100% agree with your point of view. So I think I will save my breath and leave you to ‘stu’ in your own juice.

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    2. JonnyBanana43

      Well said. 
      Barr-hack O-bama even tried to muscle in to help the Osbourne and Cameron scum. 
      We don’t fall for this establishment claptrap anymore. 
      Open up dem free markets. 

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  6. Agent5496

    Just like those vendors who paid up front to use ‘on line agents’ the Brexiteers can’t accept theyv messed up.

    Wake up smell the coffee, prices coming down, less buyers around, agents closing, law firms cutting back on staff, surveyors scratching around for mortgage vals….the list goes on and on.

    Project reality

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    1. JonnyBanana43

      And that’s all because of Brexit…?!?? 
      Stop believing those flyers you picked up on the March. 

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    2. Property Pundit

      First class numpty.

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    3. Leespoon

      When will it end…. the never ending sulk of the remoaner…..

       

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    4. Dom_P

      You know the thing that I hate most about the whole Brexit thing? The derision and division it has created in the UNITED Kingdom. Look at us; someone expresses an opinion which differs to someone else’s and it descends into insults and made up words that didn’t exist pre-Brexit.

      We are grown adults who should be able to express alternative views without mocking each other.

      This is the real damage in my opinion, it’s created a societal and generational split that will take a long time to recover from.

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  7. Ric

    Not sure if anyone went to the 2018 Relocation Agent Network Annual Conference and listened to Darren Shirlaw. if so… enough said.

    although time for a song… “there maybe trouble ahead…..”

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  8. Old Sage

    The trouble with Project Fear is that they can spout whatever scenario they want because its a ‘possibility’ it ‘may’ happen it ‘could’ happen.

    Its also a possibility that prices will increase by 14%. Now that would make a good headline!

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    1. Leespoon

      or 8%…. or 23.5%…. or any number you can think of…. times four point three…. and a half….. love the nonsense from the remoaners, but getting a bit tedious now….

       

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  9. Woodentop

    I wonder if he has the lottery jackpot number for this week? Only time will tell. What is in no doubt is people will still continue to buy and sell and this prediction will do more harm than good, based on a guess, which they got wrong last time. Just like any divorce settlement, its messy, it hurts at first but everyone picks up and often say they wish they had done it sooner and get on with life for the better.

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  10. Essjaydee51

    When we voted out, the FTSE was at 6450 the house market was overheating and stock was low and carney made a similar prediction, whether the out voters were right or wrong comes down to personal opinions, none right none wrong and no one knows the future but IMO it looks good however we are a democracy and the 48% need to accept that because bitterness, frustration and finding things and peeps to blame it on will only steer you down a more gloomy path. The FTSE is now at 7060 (up 10%) there is more housing stock but the market is tough for many reasons not just brexit so I’m sure ourselves and our children and their children Will be fine, we fight to succeed no matter what, we never lie down and sought defeat.

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    1. AgentV

      I think one of the main reasons the FTSE is up by 10% is because the fall in the value of the pound after the referendum made our stocks and shares a very attractive proposition for foreign investors.

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    2. Woodentop

      I don’t know about anyone else but if people are not happy with the current proposal on the table, would the politicans please tell me what part they don’t like and importantly the answer? All I hear is sounding off , it is not good, its it will do harm and a political football by labour with the motive of self interest to get back into power. 

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      1. Leespoon

        Answer is simple….. no deal, no divorce payment, no EU, no problem!

         

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  11. IWONDER36

    Bank of England; How can we help?

    Government; Oh I don’t know, tell them something that’ll scare them!

    Bank of England; Well, people love money, let’s tell them they’re gonna lose a sh*tload if this non-deal dressed up as deal doesn’t go through?

    Government; Sounds like a plan, crack on! You can count on that bonus too 😉

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  12. James Wilson

    We haven’t heard this level of utter nonsense since …. oh ….. June 2016!    Remember Osborne’s “punishment budget”.   Remember Osborne promising an 18% decline in house prices (which probably got a lot of young people to vote for Brexit).   It was all nonsense in 2016 and it is nonsense today.   Mark Carney is an absolute embarassment to his office.

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  13. Property Pundit

    It’s the millenium bug all over again. The steely will get us through, the weaklings will continue to panic.

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  14. Quags

    Thank you Mr Carney,

    That statement has resulted in us losing a sale today on a £600,000 house. Brilliant.

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    1. Marc Shoffman

      Hi Quags. Are you able to talk to us about this, we would be keen to explore it further to highlight the damage Carney’s comments are making. Please email marc@propertyindustryeye.com

      Thanks

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  15. Robert Barr

    The issue is not with Mark Carney or the Bank of England who have shown fortitude and good practical governance by planning for the worst, but on closer inspection of the report suggest they do not think it will be anything like as bad, which is anyone’s book is a highly sensible concept.  The issue is with the sanctimonious press reports taking the “worst case scenario” as absolute fact to sell papers and advertising space.  Even the article above is guilty of this to a certain degree by not providing a more balanced view.  Perhaps we should be looking to regulate the press rather than introducing a lettings fee ban!.

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