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Mark Carney’s Worst-Case U.K. Housing Scenario Deemed ‘Highly Unlikely’ (Bloomberg)

House

By Sharon R Smyth
September 20, 2018

  • Economists says 35% home price drop in U.K. highly unlikely
  • London home values to rise up to 10% in soft Brexit: survey

Economists aren’t buying Bank of England Governor Mark Carney’s dire scenario of a U.K. housing crash in the event of a chaotic no-deal Brexit.

Home prices are “highly unlikely” to plunge as much as 35 percent in three years in a worst-case warning laid out last week by Carney, according to a survey of 10 economists by Bloomberg News. Values would decline 10 percent or less, according to six of the respondents. The remaining four said values could decline more than 10 percent but not as much as 35 percent.

The survey offers a more optimistic view on the prospects for U.K.’s property market as analysts and economists are trying to parse divergent signals. It adds to encouraging signs this week pointing to a rebound in home prices after the longest losing streak since the financial crisis. Data compiled by property website Rightmove this week said asking prices for U.K. house prices rose 0.7 percent in September, led by stronger sales. Nationwide, home values in August notched the first increase in five months, according a report by Acadata.

In the event of a soft Brexit, seven respondents said home prices could rise 5 percent to 10 percent in London, where demand outstrips supply. Two said they would increase by more than 10 percent while only one said they would continue to stagnate or fall.

Continued on https://www.bloomberg.com/news/articles/2018-09-20/carney-s-carnage-scenario-for-u-k-housing-deemed-too-extreme?srnd=brexit

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