On the 23rd of June, the UK will decide on their future in the EU via an in-out vote.
However, there are mixed opinions and plenty of uncertainty as to whether the result of the EU referendum will affect the property market or not, and if it does, by how much.
Is the looming EU referendum already affecting the market?
As was evident in the pre-election period, there is nothing more unsettling than uncertainty. A report by the National Association of Estate Agents found that demand for property was at the lowest it had been all year in the run up to the General Election.
If a Brexit does happen, what could the consequences be for the UK property market?
This would depend on the impact a potential Brexit would have on the economy on the whole, but research and comments from industry insiders have given us an idea as to what some of the potential consequences could be.
A recent survey by an online estate agent has found that of the 55% that believe house prices would be affected, 34% say it will increase their price, while 21% think it will go the other way.
But what do the insiders think? In their research piece entitled Brexit: Breaking Up is Never Easy, or Cheap, Credit Suisse analysts Sonali Punhani and Neville Hill say leaving the EU will result in a fall in house prices as a result of weaker incomes, and there will be a lower demand for housing due to a fall in immigration.
The potential impact on London’s property market
At the end of last year, Rob Perrins, Managing Director of developers Berkeley, said that a Brexit would mean London having less influence, fewer jobs and lower growth – therefore needing fewer homes built.
Indeed, after Boris Johnson gave his support to a Brexit, sterling fell to a seven-year low against the US dollar.
Goldman Sachs has warned a Brexit could cut sterling by a fifth in value as investors flee the pound – those already invested in London could sell up quickly, rather than see their assets lose value.
66% of property industry insiders thought Brexit would have a negative effect on inward foreign investment, according to a recent KPMG survey.
Brexit may cost London property its ‘safe-haven’ status amongst foreign investors – those already invested could sell up and look elsewhere, and those thinking about investing could be deterred completely.
It’s clear that with the many ifs and buts flying around, these forecasts can only be taken as speculation at this stage, until the UK decides in June.
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