The EU referendum has unsettled the property market so what does the future hold? Sharon Dale reports.
With just 12 days to go before the EU referendum, campaigners on both sides are using the strongest ammunition in their armoury, including bombshells about property.
The Remain camp major general, David Cameron, has repeated the claim that the cost of the average mortgage could rise by almost £1,000 a year if Britain leaves the European Union.
Britain Stronger in Europe says Treasury analysis shows that if Britain goes it alone uncertainty over the economy could lead to tighter lending conditions and higher mortgage rates. The research predicts that mortgage rates could rise by 70 basis points, meaning that a mortgage with an interest rate of 1.5 per cent would rise to 2.2 per cent. For an average property costing £292,000, this would mean a mortgage payment increase of £75 per month, pushing up annual payments by £920 a year. Remain touched another voter weak point by adding that first-time buyers may have to pay £810 more per year, making it harder for them to get on the property ladder.
This came on top of Treasury analysis last month that suggests that average house prices could be between ten and 18 per cent lower by 2018 if Britain votes to leave the EU. This was backed by analysts at Deutsche Bank, who say that voting to leave would instantly reduce house prices.
The shudders from homeowners, would-be buyers, housebuilders and estate agents have been palpable, even thought the Vote Leave camp say the claims are “desperate” and “scaremongering”.
Those in favour of Brexit are adamant that the shortage of housing and the number of foreign investors keen to put their money into UK property will help shore up prices. The pro-Brexit Tory MP and Leader of the House of Commons, Whether your are in, out or indifferent, there is no doubt that the claims and counter claims about have had an effect on the property market,
Estate agent Andrew Beadnall, of Beadnall Copley, says: “The uncertainty caused by the EU referendum is having a negative effect on the local housing market, largely due to the negative comments on both sides. A couple of weeks ago, the media had a field day reporting suggestions that house prices would fall by 18 per cent in the event of the UK leaving the EU. Such comments do not help our industry as it leads to a drop in confidence among both sellers and buyers. A lot of people are telling us that they are ‘waiting to see what happens’. I am sure that normality will resume after the vote.”
Ben Pridden, Head of Residential at Savills York, agrees: “In Yorkshire there is no doubt that the phones are quieter than we would expect, although, interestingly, sales this year are up on last year. Whatever the outcome on June 23, given the predominantly domestic nature of our market, there will be a resumption of buying and selling in Yorkshire by downsizers or upsizers looking to get on with their lives.”
Over at Yorkshire-based Hunters Property Group, Sales Director Martin Robinson, says that the housing market is easily unsettled by elections and major events.
“When there is uncertainty, people will hold onto the most secure thing they have, which is often their property, so the referendum is likely to have an effect , though we have not seen a reduction in listings. Sales and offers have been slightly slower but that could be down to school half-term holidays,” he says.
Hunters predictions for property market performance have been based on Britain remaining in Europe. “If we stay in following the 23rd, we predict a well-managed economy where property price growth remains in single figures each year and that is because we are seeing a greater supply of new homes. We also predict that interest rates will remain low and the ability to acquire and service a mortgage will remain good, which will support both the sales and lettings market,” says Martin.
“The impact of a Brexit outcome will depend on the wider affect on the economy as a whole. Bricks and mortar is always considered a safe bet but a Brexit may affect the availability of funds for mortgages, who knows?”