Will UK house prices go down if there’s Brexit?
The big EU questions: With less than three weeks to go before the potentially epoch-making vote on British membership of the EU, the debate so far has been characterised by bias, distortion and exaggeration. So from now until the referendum we are running a series of question and answer features that will explain the most important issues in a detailed, dispassionate way to help inform your decision
Ben Chu Economics Editor @Benchu_ Monday 6 June 2016
100
Dalston-houses-Daniel-Lynch.jpg
‘Treasury analysis has suggested average house prices could be between 10 and 18 per cent lower by 2018 in the event of a UK vote to leave the EU’ Daniel Lynch
Why are we asking this?
Because there have been some lurid headlines about what Brexit would do to the value of our precious bricks and mortar. Analysts at Deutsche Bank and the credit rating agencies S&P and Fitch have all warned in recent months that voting to leave the European Union would instantly reduce the value of UK houses. The International Monetary Fund mentioned the possibility of house price declines too. But the biggest splash was made last month when a Treasury analysis suggested average house prices could be between 10 and 18 per cent lower by 2018 in the event of a UK vote to leave the EU.
So prices would definitely fall then?
Well, not necessarily. Despite the slowdown in the wider economy, house prices are still rising fast. They rose at a rate of 9 per cent a year in the year to March 2016 according to the Office for National Statistics. And prices are projected to increase by roughly a further 10 per cent by the end of 2018 by the Office for Budget Responsibility. So if prices were 10 per cent lower than they would otherwise be by 2018 (using the Treasury’s own figures) that implies prices could actually be flat on today in cash terms.
