The EU Referendum is less than a month away and headlines dominate the media on the possible economic impact of a Brexit. UK house prices are said to have risen 1751% since the last 1975 in/out referendum and George Osborne has recently suggested that house prices could significantly fall if the public vote to leave the EU in June.
Largely untested and unknown, individual viewpoint on the scale of the potential consequences of Brexit generally depends on which side of the fence you sit on.
We shouldn’t be surprised that the media are perhaps overstating the “fears” surrounding the referendum which is creeping closer into view. Fear is a strong word for the current mood, but it’s a policy decision being made around which there is more uncertainty than perhaps many others in recent years. Couple this uncertainty with the continued state of voter apathy and there’s an uneasy feeling about the lack of real information about the consequences of a British exit.
The housing market is predicted to slow down as a result of this unease, not least by Countrywide. A similar slowing of the market occurred last year in the run-up to our General Election. Morgan Stanley predict a downward change in the price of new-build flats of anywhere up to 20%.
Elsewhere, Governor of the Bank of England, Mark Carney points to transactions in commercial real estate falling by 60% in London and 40% around the country as a consequence of the Referendum. He suggests more negative impacts will be felt in the housing market.
Other views are available, however. According to a survey carried out by McBains Cooper, half of UK property company owners and directors expressed that they are not worried about the question for the public at the referendum. In fact a larger portion of those surveyed are unconcerned than those who are – 49% versus 31%. For these property builders, the fundamentals of the UK property situation do not hinge on Brexit – we are still not supplying enough homes to the market, prices look set to continue an upward trend, and the appetite to own a home remains intact.
All this seems to suggest that actually even this close to the referendum, we still have very little idea about what Britain outside of the EU might look like, and therefore it’s very difficult to reasonably guess how the property market might be affected.
All the current speculation is based upon ifs and buts and uncertainty and there are no prominent factors that could swing the market either way. We anticipate that the EU Referendum will represent no more than a temporary lull as people await the result. The property market is driven by demand and it is clear that demand for housing remains strong. The focus needs to remain on building more new homes and addressing the housing shortage.