The Brexit Impact 

With the EU referendum looming this week, more and more we are being asked what the causal effects of leaving will be upon our everyday lives and the property market in general. With claims being batted about between both sides throughout the campaign knowing who to believe can be difficult so it is easy to understand why there is such uncertainty in the air. It is important to note at this point that a referendum is defined as; ‘a vote in which all the people in a country or an area are asked to give their opinion about or decide an importantpolitical or social question’ and the decision is not legally binding.[1] Many people believe that a ‘vote leave’ victory will spell the end of the relationship between the EU and the UK on June 24th however subsequent to the results a thorough Government consultation period will ensue and a well thought out response shall be issued. Whether this is to leave the EU is determined by the Prime Minister and Parliament and whilst they will obviously factor in the vote result this will more than likely not be the deciding factor.

 

After a quick scour of the articles written on this matter is it easy to deduce that the general consensus from property experts is that Britain leaving could cause property prices to fall highlighted by a survey commissioned by KMPG which found that 66% of estate experts believeBritain leaving the EU would have a negative impact on inbound cross-border investment’.[2] Furthermore analysts at Deutsche Bank and S&P and Fitch have all forecast that in voting to leave the EU we would instantly reduce the value of UK homes.[3] However perhaps the most worrying claim for homeowners is that from a Treasury analyst who suggested average house prices could be between 10-18% lower by 2018 in the event of a UK vote to leave the EU.[4] This claim has also been backed up by George Osborne who claims that there will be an ‘economic shock’ that will increase the cost of mortgages if the UK votes to leave the EU.[5]

 

Balancing these claims (as is only fair!), in the last few years in Leigh and the surrounding areas we have observed a steady rise in property prices of roughly about 10% per annum therefore in theory, this will counter-balance any devaluation. Therefore it is fair to suggest that whilst the value of property may fall by 2018 as stated above, this could bring it back in line with current prices and whether property values decrease in real terms or actually just remain the same is yet to be seen.

 

The main issue at the moment as we hear it in the office isn’t necessarily the effects of a ‘Brexit’ but is the level of uncertainty engulfing the Country in recent times. The property market feels hesitant and nervous at the moment and if anything can stall a market in the UK it is uncertainty. The only way to ensure the market isn’t affected by the referendum (regardless of result!) is to stick to the British way and ‘Keep Calm and Carry On’!

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