In the last few months, people investing in property in the UK have been met with conflicting reports. Claims have been made that a Brexit could cause property prices to fall, whilst some experts state the opposite. In short, it’s difficult for investors to identify what the truth of the matter is – and how their vote may impact their future property portfolio.
If you’re heading out to vote today, and you’d like to read the facts before you do so, here’s a run-through of the latest figures.
Brexit or Remain? The Impact on Property Investment Opportunities
Firstly, it’s important to bear in mind one vital fact – no-one knows for sure how the EU referendum will affect property prices in the long-term, regardless of the outcome. At best, experts can offer educated guesses, based on the performance of the property market in the lead-up to the event.
However, here’s what the latest evidence suggests.
- Prices set to fall by 18% with Brexit? Chancellor George Osborne claimed that house prices could fall by 10 – 18% by 2018 if the UK pulls out of the EU. However, this is a somewhat misleading figure, as it’s based on present house prices, not future house prices, which are predicted to be 10% higher than they are now. This means that the worst possible outcome is an 8% reduction in prices. It’s still a reduction, but not quite as much as the chancellor stated.
- Value of properties to drop? By contrast, Fitch (a ratings agency), predicts that house prices will crash by as much as 25% if the UK leaves Europe – but suggests this is a good thing, bringing house prices to more ‘sustainable’ levels in comparison to average household income. A recent report from the Centre for Economics and Business Research suggested that the UK’s housing market value would drop by £26.5bn by 2018 if we leave the EU.
- London hit the worst? As London is traditionally a more volatile property market, experts are predicting it’ll be hit the worst in the event of a Brexit. Ratings agency Moody’s claimed that leaving the EU would hit the capital hard, resulting in reduced sales to EU nationals, and pushing prices down. They also pointed out that houses worth £1m or over would be most affected – as close to 50% of homes in this bracket are currently bought by foreign nationals. However, as Richard Donnell, head of research at Hometrack, states – this is the new ‘normal’ for London – and last year, property sales were already starting to fall, due to reduced demand from overseas buyers.
- Higher or lower rental income? This is an area where experts seem to particularly disagree. Some are concerned that fewer foreign nationals in the country (37% of renters in London alone) will mean reduced demand – which in turn, will drive down rental prices. Brexit may also affect the student rental market – as there are currently 125,000 foreign nationals attending UK universities.
How Should You Vote?
Ultimately – the outcome of either vote is uncertain; and it’s difficult to establish whether a Brexit or a remain outcome is more beneficial to the UK property market. Before making a decision, it’s important to try to establish the facts of the matter – as best as possible!
The Buy2Let Shop
The Buy2Let Shop specialise in helping people to invest in property in the UK. If you’re looking for a buy-to-let property for sale, we have a large number of houses on our books, which aren’t available on the general market. This ensures a competitive price, regardless of the outcome of the EU Referendum.
To find out more about our services, or how we can assist with buying a house at auction, get in touch with The Buy2Let Shop team today.