Leaving the European Union would hit the UK residential property market with prices likely to be hit significantly and make mortgages more expensive, according to the Chancellor of the Exchequer George Osborne.
Speaking on national television, he warned that if there is a Brexit, the term used to describe the country leaving the EU, then the values of homes will fall.
He also revealed that the Treasury is about to publish a major piece of research on how Brexit would affect that UK economy and that one major issue that emerges is the effect on real estate,
‘You will see the analysis we will do, but I’m pretty clear that there will be a significant hit to the value of people’s homes and to the costs of mortgages. That is one example of the kind of impact, economic impact, that we get from leaving the EU,’ he said on of ITV’s Peston on Sunday politics programme.
He has spoken out as the campaigning ahead of the EU referendum on 23 June hots up. The polls have been neck and neck but at the beginning of May an ICM poll put the leave camp slightly ahead at 45% compared to 44% for remain.
The warning from Osborne comes as prices have started to ease slightly. The latest Halifax index, just published, shows prices fell by 0.8% in April.
The market has been looking healthy recently with data from HMRC showing that sales have risen dramatically from 116,930 in February to 165,480 in March, the highest monthly total since records began in April 2005.
While sales in the first three months of 2016 were 32% higher than in the same period last year, much of both the monthly and annual increases is likely to be attributable to a rush to beat the new stamp duty tax rates for buy to let and second homes in April.
On top of this the volume of mortgage approvals for house purchases, a leading indicator of completed house sales fell by 2.5% between February and March. This suggests that the number of new buyers seeking to complete ahead of the stamp-duty surcharge had already begun to ease. Approvals, however, were still 15% higher than in March 2015, according to Bank of England, seasonally adjusted figures.
Meanwhile, supply remains historically low. New instructions by home sellers fell marginally in March following three consecutive monthly increases. Market conditions remain very tight with stock levels nearly 20% lower than a year ago, at a near historical low, the most up to date monthly report from the Royal Institution of Chartered Surveyors (RICS) shows.
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