Will Brexit cause a slump in the UK property market?
There is no doubt that the Bremain camp believe that house prices will drop drastically and are telling us that we will all lose money if we vote to leave the EU. George Osbourne has been saying that house prices will fall by 10% and up to as much as 18% by 2018 if we do leave. This is backed up by the ratings agency Fitch, one of “The Big Three credit rating agencies” who have said that house prices could fall by 25% in the event of Brexit.
With figures like these it is hardly surprising that the property market has slowed down, to the point that some property developers are offering a Brexit clause. This means that if you have put down a deposit on a new build you can have it back if we leave the EU.
As with all property figures these are predictions. Money Saving Expert’s Martin Lewis said “there are no facts” and he goes on to say “anyone who tells you they KNOW what’ll happen if we leave the EU is a liar. Predicting exact numbers for economic, immigration or house price change is nonsense. What’s proposed is unprecedented. All the studies, models and hypotheses are based on assumptions – that’s guesstimate and hope.”
Brexit or Bremain the UK has a housing crisis NOW, there are not enough homes. If we leave the EU then about 1m people will leave the UK by 2026 and our construction workforce will be reduced by 12%, if this happens how likely is it that supply and demand will change from today’s ratios?
Even though Fitch have said that house prices may fall by 25% they do however add that UK house prices are currently above sustainable levels in relation to disposable income. This in their opinion would bring house prices back to a more affordable level.
Then Simon Rubinsohn, who is the chief economist at The Royal Institute of Chartered Surveyors has predicted that house prices would continue to rise because of sheer demand.
He said: “All indications suggest that whatever the outcome of the referendum, in the long term, the imbalance between demand and supply will still exert a strong influence on the market, with house prices expected to rise by close to 25pc over the next five years.”
Martin Lewis advises “The volume of uncertainty means the only way to make the right decision is based on your political attitude to the EU, your gut instinct, and how risk-averse you are on each area that matters to you.”
In or out it is certainly sparking debate and passion, and being hotly discussed on all media formats.
Please not the opinions, beliefs and viewpoints expressed in this article are not endorsed by Howard Cundey and do not necessarily reflect the opinions, beliefs and viewpoints of Howard Cundey.