First, Bank of England governor Mark Carney’s comments about a significant drop in house prices were not a forecast, but a worst-case scenario.
Second, any impact on house prices is likely to be relatively short term, and I suspect that they would stabilise in the longer term.
Finally, the short-term shock could actually have a tangible benefit for buyers, and even for landlords who play their cards right.
Of course, it’s the Bank of England’s duty to consider the extremes.
However, as we saw in the case of the Brexit vote, these extremes are a world away from the eventual reality.
A recession has not come to pass, and indeed the jobs market and economic growth over the last 18 months have been extremely resilient.
House prices to fall in no deal
However, if we leave the EU without a deal in March, we will see an economic impact.
A short-term dip in house prices is likely, but it is unlikely to have much long-term impact.
While house prices did undergo a period of stagnation following the 2016 referendum, much of this can be attributed to the impact of changes to stamp duty.
House price growth has slowed since the referendum, but house prices are still rising.
In London the house price correction is probably welcome to some degree, as house prices had grown at a far from sustainable rate between 2012 and 2016.
So any short-term drop could well be a good thing for buyers.
Houses are long-term investments and mortgage rates are still low and likely to remain so for the foreseeable future and affordability for first-time buyers would also be improved.
If we look back through recent history, while house prices have been quite volatile through the cycle, rents have proved extremely stable.
Rents have risen in most recent years by around 2%, even during the crisis they only fell by around 1%.
Therefore, any house price correction is likely to result in an improvement in rental yields.
Long term demand for rental properties is forecast to continue to grow, and mortgage rates likely to remain low for the next few years.
This could be the ideal time for brave landlords to expand their portfolios, particularly if they take a medium-long term view.
As Warren Buffet once said, “be fearful when others are greedy and greedy when others are fearful.”