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, property investment platform British Pearl has found.
It also showed places like 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.
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.
“However, the study also shows being diligent about the area you buy in can help you avoid these increased risks, with huge variations being seen in this polarisation measure across the country.”
Landlords and buyers are always 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.
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, Beds, and Hastings, East Sussex.
The price gap between flats and houses in Watford has grown 53.2% to 201.4%, while in Hastings it has widened by 63% to 184.7%.
The warning comes after the news of Bank of England’s stress test finding in a worst case scenario there could be a 33% drop in house prices.
The prospects for rapid depreciation in Britain varies wildly between areas. British Pearl used the two measures to rank the UK’s towns and cities to identify where investors and buyers would be more likely to see market cooling result in prices falling back down to Earth more rapidly.
The average difference in price across the UK is currently 50.6%, and has grown by24.2% 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%.
Doncaster was followed by Stoke-on-Trent, with a price gap of 131.2% that had grown just 26.9%, and Blackpool where prices were 153.9% apart, after widening by 12.3% in five years.