Brexit: What would happen to the property market if Britain left the EU?
There's lots of information flying around about the potential consequences if Britain votes to leave the EU on 23rd June. At Colin Bibra, we're most interested in the impact of this decision on UK property, and what this would mean both for us, and for you.
Initially, we are likely to see a stall in the property market. Times of uncertainty always have an effect, as seen in the run-up to the 2015 general election, and in the 18 months prior to the Scottish independence referendum in 2014. Britain has been a member of the EU for over 40 years, and such an enormous change would result in a lower number of transactions, as both buyers and sellers wait for further developments.
Economists have predicted as much as a 20% drop in the value of the sterling if the Brexit goes ahead. While housing prices tend to correlate with salaries in the given area, this drop in value would largely affect foreign investors, who may well sell up to cut their losses. London is seen as a safe haven for many investors, where property will usually retain or increase its value. While the loss of this status could send some investors running, the sudden dip in prices could also attract investors from other areas.
As far as the average residential buyer is concerned, the Brexit could see a drop of around 5% in property values. This is less to do with the strength of the pound, and far more to do with the uncertainty that an EU exit would lead to, which would only increase should Britain vote to leave. In addition, it is predicted that there will be a lower demand for homes, leading to a reduction in prices, with the average home seeing a loss of around £11,000.
The state of the market will become clearer after the result of the vote, and if Britain votes to stay, things should return to normal fairly quickly. If the vote goes the other way however, it could take some time for Britain and its property market to stabilise.