In the run up to the EU referendum next week we have been reviewing what the opinion seems to be concerning how this will impact the property market. It has become clear that the country is divided by this decision and the opinions on the impact to the property market seem to be as well.
Here is a summary of the type of statements coming from each side of the campaign:
Leave Campaign Opinions
- EU migration increases house prices due to an increased demand. Stricter border controls should help to control this demand and to plan housing supply.
- Reducing the over-all demand for homes should theoretically help first-time buyers and should bring rental prices down as fewer people chase to buy properties for rental.
- Mortgage lending is not expected to be impacted by a Brexit and hasn’t yet shown any changes since the announcement of the referendum. If mortgage lending doesn’t change, first-time-buyers ability to get on the housing ladder is improved.
- The eurozone is in a worrying state which could impact Britain in many ways if we stay a part of it.
- The fall in the pound could actually cause a boost in foreign investment, boosting the property market as offices and retail units get bought up quickly.
Remain Campaign Opinions
- Nearly all economists predict that the pound will see a fall following a Brexit vote, even if this is simply caused by a dip in confidence and nothing else, which will impact property values.
- Some research suggests that house prices could fall by 10-20% if we leave the EU, and mortgage repayments could increase due to the shock of financial markets. The figures presented in these studies should be taken hypothetically because no two studies weald the same results and many believe that a price plummet is purely speculative.
- Monthly mortgage repayments could increase due to higher interest rates if we leave the EU, making it harder for first-time buyers in-particular to get onto the property ladder.
- The UK property market is propped up by foreign investors who may leave in the event of a Brexit. Less demand for properties could cause a drop in house prices.
- A crash in the property market will likely lead to another banking crash due to the reliance the banking industry has on mortgage lending and the valuation of their debts.
What should we believe?
Regardless of whether or not we leave the EU, our population will still continue to grow at a steady pace that will outrun the house building level. This will still lead to more demand than supply which leads to higher house prices.
There doesn’t really seem to be an obvious answer to the Brexit vote no matter which way you look at it, probably explaining why the opinion polls show how close the two sides currently are.
For every prediction made about the property market, a strong counter-argument can easily lead you down a different path. Unfortunately there are no concrete facts surrounding this, other than perhaps the pound is likely to dip after a leave-vote due to a confidence drop and period of uncertainty.
The decision is ours to make!