Bank of England governor Mark Carney has warned ministers that a "no-deal" Brexit could see house prices crash by a third, Sky sources say.
Briefing Theresa May and her top team in Downing Street, Mark Carney laid out three different scenarios the Bank believes could come to pass if Britain leaves the EU without a withdrawal agreement.
The worst case scenario would see Britain go into recession, a slump in the value of the pound and a crash in house prices.
Sky's political editor Faisal Islam said a source characterised the governor's comments as "not a prediction, a worst case scenario", adding Mr Carney's comments were received "respectfully" by those around the cabinet table.
Mr Carney was called to address ministers as part of a special three-and-a-half hour meeting on the government's preparations for a "no-deal" Brexit.
Downing Street said ministers agreed to "ramp up" work to be ready for such an outcome.
A spokesman for the PM said the government was making sure it was ready for "all possible scenarios".
"Cabinet agreed that securing a deal with the EU based on the Chequers white paper was the government's firm aim and we are confident of success," he said.
"However, as a responsible government, we need to plan for every eventuality. The cabinet agreed that no deal remains an unlikely but possible scenario in six months' time.
"Departments have significantly increased no-deal preparations in recent months.
"Cabinet agreed to further ramp up no-deal preparations in the weeks and months to come to ensure the country is ready for all possible scenarios."
Also on Thursday, the government released the latest batch of papers outlining how a failure to reach a deal could impact on British life.