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A no-deal Brexit could cause a dramatic slump in property prices according to the Governor of the Bank of England Mark Carney.
Governor Mark Carney issued the controversial statement that a no-deal Brexit could see property prices fall by 35 per cent over the next three years. This is not the first negative statement the governor has issued and in general he is not optimistic.
There is a concern amongst Brexit supporters that the persistence of negative feeling could eventually impact investor sentiment. For example, it could be that businesses delay investment in their operations as they wait to see the real impact of Brexit.
Investors in both stock markets and property markets may also take a similar approach. However, this negative perspective could become a ‘self fulfilling prophecy’ as businesses draw back on investment leading to increases in unemployment and a fall in household income.
An analyst at Hamptons International, Aneisha Beveridge rejects this negativity and said that house prices have never fallen by a third at any point over the last fifty years. She explained: ‘During the last financial crash of 2008, which was a housing market-led crisis, prices fell 13.7 per cent between 2007 and 2009 and recovered in just over three years,’ she says. ‘A Brexit deal will undoubtedly be less damaging in the short term than a ‘no deal’ scenario, but rest assured, if history is anything to go by, it’s very hard to imagine house prices falling by that degree.’
CEO of Winkworth estate agents, Dominic Agace, added: ‘I don’t see a no deal causing a sudden, significant price correction. There would inevitably be some confusion which would have a downward impact on housing transactions, but this does not equate to price falls as sellers, supported by low interest rates, will simply hold off rather then sell at significant discounts’