As the Brexit Referendum becomes nearer, what does it mean for UK property?
On 23rd June, the UK is set to decide on whether or not to remain within the European Union (EU) in a Brexit vote. Within this referendum, all of the public that are above the voting age wll be allowed to take part, giving a “Yes” or “No” answer to a question. Whichever side wins a majority of over 50% of the vote will be considered to have won the referendum.
The debate regarding Brexit has saturated the news in recent weeks. All sides of the political and media establishment have shown evidence of being both pro and anti-Brexit. Such is the partisan nature of the debate that the actual truth regarding potential consequences has become mired with personal agendas.
Although younger people have been shown to overwhelmingly support remaining in the EU – with roughly 60% support for remaining from under 30s – there has been a recent argument from pro-Brexiters that they would actually gain from Brexit. Chris Grayling, a Tory Politican and Champion of the “Vote Leave” camp, recently said that leaving the EU would help alleviate the housing crisis, since he viewed the main pressure on housing prices being migration into the UK. Indeed, in 2015, an estimated 270,000 citizens from other EU countries immigrated to the UK. Therefore, by leaving the EU and introducing more stringent immigration controls, it could alleviate migratory pressures on house prices.
On the other hand, George Osborne cited Brexit as a potential danger by causing huge house price deflation. Osborne said that Brexit could reduce London house prices by 10 to 18% – reducing the average London house price by £62,000 in two years. Of course, this prediction is bordering on the ludicrous. It fits Osborne’s narrative to scaremonger amongst homeowners. The only point that this statement proves is how politically charged the debate has become and how institutions such as the Treasury, which are meant to be neutral, are now churning out politically charged predictions. To cite the Evening Standard’s Simon Jenkins: “We are now entering a world in which economists simply seek predictions to support prejudices.”
At the current moment, amidst the atmosphere of uncertainty in the UK, it may be a good time to consider getting onto the property ladder. House price growth fell from 4.9% in April to 4.7% in May and may continue to fall until a few months after the referendum decision when the markets have gained more clarity for the future.
The potential positives and negatives of Brexit are still murky and fuelled by political agendas. It seems that a large element of the Brexit argument has become related to the UK property market. Thus, it is important that all homeowners take a long hard think before they vote regarding the consequences.
What do you think about Brexit? Comment and let us know!
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