House prices in London’s commuter belt will be hardest hit in the event of a no-deal Brexit because it is home to some of the most polarised property markets in the country, according to British Pearl.
The property investment platform said that Stevenage, Watford and Hastings are braced to feel the full brunt of the no-deal ‘sledgehammer’ because the price gap between flats and houses are among the greatest in Britain and have widened the fastest.
Landlords and buyers are keen to avoid speculative bubbles and over-heating local housing markets because of the obvious risk that prices can collapse further and faster in a correction.
Mind the gap
The company found that the average detached house in Stevenage was 197% more than the average flat (£553,697 vs £186,422). This was the fifth largest gap anywhere in the UK and had grown 68.2% in five years.
The combination of these two measures makes the Hertfordshire town the most polarised property market in Britain, followed by Watford and Hastings.
The average difference in price across the UK is currently 50.6%, and has grown 24.2% in the past five years.
At the other end of the spectrum was Doncaster, where the average detached house was 140.6% more than the average flat, while the gap between prices over the five years increased just 18.4%.
Could prices crash by a third?
Last week Bank of England Governor Mark Carney warned a chaotic withdrawal from the EU could cause house prices to crash by as much as 33%.
However, the prospects for property prices in Britain varies wildly between areas.
James Newbery, investment manager at British Pearl, said: “Parts of the UK property market have made considerable gains and, the relative value of homes in different price bands now poses a serious risk to homeowners and investors in the run-up to March 2019.
“The fallout from no-deal is most likely to be felt hardest in the capital’s commuter belt, where markets have moved too far and too fast. That is bad news for both ordinary investors and homeowners, particularly those who have borrowed to make their purchase.”
Areas where property prices are polarised between low-cost flats and high-value houses could see prices fall the fastest and furthest.