The firm modelled the impact on house prices of two scenarios. One looked at no-deal and the other considered Brexit with a withdrawal agreement.

With a deal, house price growth was forecast down 0.1 per cent this year and up 1.3 per cent in 2020.

With no deal, the forecast was a decline of 1.1 per cent this year and a sharper fall of 6.2 per cent in 2020.

“We modelled the no-deal scenario taking account of the potential impact of Brexit on local economies, with larger falls in prices experienced by more heavily affected regions,” the KPMG report said.

The regions to take the strongest hit from no-deal were London, forecast to fall 7 per cent, and Northern Ireland, down 7.5 per cent, in 2020.

The next most impacted regions were the South East down 6.7 per cent, North East with a fall of 6.5 per cent, East of England down 6.4 per cent, North West down 6.1 per cent and a drop of 6 per cent in Scotland.

Demand could be affected

“While our forecast represents a plausible response of house prices to the shock of no-deal, the overall impact is highly uncertain,” said Jan Crosby, UK head of housing at KPMG.

“It is possible that demand for housing could be further affected by a fall in confidence, with homebuyers becoming ever more reluctant to commit to house purchases over the coming year. 

“We looked at past episodes of house price falls across regional markets as a guide to what could happen if conditions become more severe,” Crosby said.

The report forecast a milder correction than in 2008, when prices dropped by 15 per cent, and 1990 when prices fell 11 per cent.

But it added: “A further shot to buyer confidence could tip the overall market into a much deeper slump.”

However, a dent in values in the short-term would not affect the underlying pressure within the market of lack of housing stock.

“The market is expected to recover most ground in the long run to the extent that the economy finds a new successful path,” the report said.