With less than two weeks to go until the UK referendum, there seems to be a vast uncertainty of the effect Brexit will have on the property market.
The Royal Institution of Chartered Surveyors (RICS) has looked at what the impact is currently and also assesses what the outcome of a leave and a stay vote might be.
It points out that its recent residential market surveys indicate a chronic shortage of housing across the UK. Residential investment transactions in the residential sector have slowed and limited house buying transactions across the house price spectrum.
‘This is not unexpected as there’s usually a slowing of residential transactions before any national poll. After an election vote we typically see the residential sector recover and bounce back as stability and confidence returns,’ the report says.
‘Should the UK opt for a Brexit, we could assume that uncertainty could linger while the UK Government negotiates new trade deals and relationships with the EU and third countries,’ it adds.
The analysis report explains that the lower to middle priced property market is, in the main, directed by domestic participants so the uncertainty has had less impact on demand and house prices at this end of the market when compared to the higher end.
However, a significant number of higher end properties, particularly those in London and the south east, are purchased by EU and non-EU individuals and the report suggests that a Brexit could see less demand for higher end properties from these individuals, thus relieving pressure in demand for higher end residential areas. ‘We can, therefore, suggest house prices could decrease in the immediate to short term,’ the report states.
It also suggests that there could be an effect on student accommodation. There was over $6.5 billion of investment in the UK student accommodation sector in the first three quarters of 2015. ‘Changing higher education enrolment rules could deter international students thus affecting demand for student and PRS accommodation,’ it adds.
‘However, the outcome of Brexit could provide an alternate effect. The No result of the Scottish referendum saw the housing market recover immediately with little effect, so with this in mind we would expect the UK to follow suit if the vote is to remain in the EU.
It has also been suggested that leaving the EU could lead to a devaluing of the pound, which would increase import costs, this could then lead to prices rising and inflation jumping which could force the Bank of England’s hand to increase mortgage interest rates. Supporters of a recut say that this is just scare mongering but then ofcourse they would say that – make sure you have your say and vote on June the 23rd!
To find out more information visit the EU Referendum website.
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