Brexit Busting: Houses In London’s Commuter Belt Most At Risk Of No-Deal ‘Sledgehammer’

  • Alarm bells ring for UK’s most polarised housing markets after Bank of England governor warns of no-deal crash

  • Stevenage, Herts, could be most at risk after price gap between flats and houses grows 68% in five years to 197%

  • Watford and Hastings, also within the capital’s commuter belt, rank second and third, as buyers and investors face growing housing bubble threat

  • Doncaster had the least polarised market — the price difference there has grown just 18.4% in the same period to reach 140.6%

 

Brexit Busting: Houses In London’s Commuter Belt Most At Risk Of No-Deal ‘Sledgehammer’

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 revealed today.

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, research shows.

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.

Table 1: UK’s Top 10 Most Polarised Towns/Cities

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 Bank of England Governor Mark Carney warned a chaotic withdrawal from the EU could cause house prices to crash as much as 33% in a worst case scenario and send a financial shockwave through the economy.

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 findings will serve as a warning to landlords, homeowners, first-time buyers and property investors who won’t want to risk placing big bets on markets where the gaps between different steps on the housing ladder have grown most dramatically ahead of Brexit.

The average difference in price across the UK is currently 50.6%, and has grown 24.2% in the past five years.

Table 2: UK’s Top 10 Least Polarised Towns/Cities

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 12.3% in five years.

James Newbery, Investment Manager at British Pearl, commented:  “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.”