Europe: Should we stay or should we go?27 February 2016
We know the UK’s EU referendum will take place before the end of 2017, but the Prime Minister is keen to make it happen as soon as possible with June or September 2016 looking likely.
So how will the build-up to the referendum and the event itself impact the UK property market?
Before any such major event, where the economy is likely to be impacted, there is always uncertainty in the property market amongst buyers and sellers. History also shows that the build up to general elections creates a lull in activity. We anticipate buyers and sellers to take stock and eagerly monitor developments. However the UK, and particular London, has always been a draw to the foreign investor.
Research shows a mixture of opinion amongst the UK public as to whether house prices would rise or fall should the UK vote to leave the EU. Credit Suisse believe in the event of a vote to leave, house prices would fall slightly. In the medium term thereafter, there would be a drop in housing demand because of lower immigration and the UK’s changed status as a financial hub.
Forecasts of the UK economy in general if there was an exit from the EU are stating a stagnation in growth. However, since the UK has been part of the EU, the average UK house price has increased by more than 2,000%. Based on this, it seems the EU has been good for the UK property market.
The property market is just one of the sectors being debated in the run up to the EU referendum and there will be other socio-economic factors which will impact the UK economy in general. But one thing is for sure, the upcoming EU referendum presents a very interesting conundrum.