What does the EU vote mean for the property market?
Misquoted facts and propaganda have been a problem on both sides of the Brexit argument – but for those who own a home or are hoping to buy, which is the best choice?
Today (Thursday 23 June), millions of Brits go to the polls to vote on the issue of remaining in the EU. With both the ‘Remain’ and ‘Leave’ campaigns consistently accused of unsubstantiated claims, it’s often hard to know exactly what the effect an exit would be on UK homeowners and potential buyers.
The ‘Leave’ campaign states that freedom from Brussels will position the UK as a financial powerhouse with a high standard of living and a level of prosperity not seen since the days of the empire. And of course, these claims are rubbished by the ‘Remain’ campaign, with many believing that it will trigger a nationwide recession, dwarfing the economic downfall we suffered almost a decade ago. So who’s right and who’s wrong?
The biggest issue of Brexit is the lack of empirically valid unbiased data. Many Brits believe that the UK is the most important EU state, a statistic that is sadly far off base. In terms of contributions to the EU, we lie in fourth position behind France, Germany and Italy and as a result, the EU is far less dependent on us than we think. And whilst we do contribute heavily each year financially, the savings we would make by leaving are far too small to really aid the country when compared to our annual GDP. Those who wish to leave the EU, however, believe that the amount of money we would gain through long-term trade deals would help the UK increase funding for the NHS, property development and education.
The problem is that on both sides of the argument, many are voting on issues of contention such as immigration and the dream of being independent, while ignoring the more subtle issues that would impact UK property owners and investors long-term.
It is also important to take note of events outside of the capital, as much of the regeneration in the north of England stems from EU legislation and funding that has allowed for greater investment in more areas of the UK. So many ‘Remain’ campaigners believe that voting to leave the EU will simply lead to a reduction in funding for towns and cities outside of the south east.
‘Leave’ campaigners, on the other hand, take the view that thanks to the funding, these cities are prospering successfully already and will continue to do so, using events such as the BBC’s move to Manchester as proof.
For those in the property market, experts believe a vote for ‘Leave’ will lead to one of two scenarios. The first is that overseas buyers will fail to see the attraction of the purchasing in London thanks to recent changes in tax and will instead invest in other European cities, leaving the capital as a property ‘ghost town’ with prices nobody domestically can afford.
The other scenario is that the value of the pound sterling will fall so dramatically that interest rates will rise to a point that is untenable for most looking to buy a home, further dampening the market. Many UK property experts believe that prices could fall as far as 30% if the Brexit occurs, leaving vendors looking for a fast house sale in a precarious position.
Those who wish to leave, however, see the situation differently. Even with talks of a possible exit, house prices have continued to rise – so why would they not continue to do so, considering the property market is largely driven by consumer confidence? Moreover, since we entered the European Economic Community, the number of new homes being built has continued to fall, and with the new found wealth and improved economy we would enjoy, more houses would be developed and those looking to get on the property ladder would most definitely find it easier.
Unfortunately, the only way to find out whether the UK would benefit from its independence is by taking the plunge and voting ‘Leave’ – but if the negative forecasts regarding our financial security are correct, the decision will have already been made and there would be no going back – and therein lies the problem.
Remaining in the EU means we have a good idea of what the future holds, whereas leaving the EU is a gamble – and for those who have much to lose, such as homeowners, the risk may not be worth taking.
Hoping to sell your home quickly? Why not ask National Homebuyers for advice, as we buy any house. Call 08000 443 911 or request a call back to find out how much you could get for your property.