With the referendum vote on June 23rd just around the corner, the property experts at Experience Invest look at what could affect the UK’s property market.
The UK’s EU referendum has been making waves in the property industry but what will leaving the EU mean for the UK’s property market?
Some news outlets have reported a general cooling in the market in the run up of the election, with many expecting that the vote could cause the market to go one of three ways.
One camp believes that the UK’s property market will crash substantially crash if the results lead to the country leaving the EU.
Chancellor George Osborne has openly stated that the UK house prices could drop by 10% to 18% if the country decides to leave.
The other camp believes that property prices will recover quickly if the UK leaves due to the high demand from buyers in comparison to the current available housing stock.
“We’ve still got this demand and supply imbalance and I think the demand is still there, supply is still limited. From a domestic point of view, I don’t think Brexit is going to have a significant impact at all,” Stephen Williams, an equity analyst at the investment manager Brewin Dolphin recently commented.
Finally, if the UK remains in the EU, it is expected that the market will experience an influx of investment from UK and overseas buyers. In this scenario, it is expected that the recovery will mirror what was seen after the 2015 general election.
In the run up to the election last year the market slowed down ad most people waited for the result before they invested their money. Once news of the results were made public, money flooded into the market.
“History shows us that the market recovered quickly from this short term ambiguity in 2015 and in fact, home sales have really been building momentum over the past year. The property market is chock-a-block with eager buyers,” Peter Rollings executive officer at Marsh & Parsons explained to Property Wire.
The future of the UK’s property market
Uncertainty surrounding the vote has created a cautious buying environment, with some big firms offering property investors a ‘Brexit clause’ which would mean that they could pull out of a deal if the vote concludes that the UK should leave the EU.
There is much speculation about how leaving the EU would affect the country’s real estate market.
Dale Anderson from Experience Invest believes that overseas buyers will flock to the UK if the value of sterling declines in light of a vote to leave the EU.
“If we do decide to leave the EU, it may help boost sales in the buy-to-let sector over the long term. The UK and London in particular were an attractive safe haven during even in the global financial crisis of 2008. In fact, we saw an increased demand for income generating assets such a student accommodation and discounted residential apartments as it may create buying opportunities if prices do drop,” Anderson explained.
With so many conflicting opinions reported in the media, it is clear that nobody can truly predict what will happen after June 23rd. What is clear is that until the votes have been counted and the decision has been finalised, the UK’s property market will continue to operate at a less accelerated pace.