With the vote on EU membership moving ever closer, Chancellor George Osborne has used house prices as a pawn in his latest plea for voters to back the ‘Remain’ campaign.
In a television address, Mr Osborne claimed that if the UK left the EU, than there would be a, ‘significant hit,’ for property prices.
Costly
Speaking to Robert Peston on ITV, Mr Osborne said, ‘you will see the analysis we (the Treasury) 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.’[1]
‘I think it’s very important for people to think about that and we are going to be producing some more research on that in the coming weeks. It’s already clear from the Treasury analysis that for example, there would a significant shock to the housing market, that would hit the value of people’s homes, that would hit the cost of mortgages,’ he continued.[1]
Osborne also noted that, ‘we’re doing the work on it now but the emerging Treasury analysis backs up what you are hearing from major banks like Virgin Money that the value of people’s homes will be affected and people trying to get on the housing market would be hit because mortgage costs would go up.’[1]
Brexit will badly hit house prices-Chancellor
Increases
Just last week, the chief executive of Virgin Money, Jayne-Anne Gadhia, observed that a British exit from the EU would cause house prices to slide, but push interest rates up.
Gadhia said, ‘my personal view is that property prices would be likely to come down, as inward investment, particularly in London, is less available. The risk on a Brexit is I think that property prices come down and interest rates go up.’[1]
Noting that buy-to-let lending would dip following the passing of the stamp duty surcharge deadline, Gadhia also said she believes demand for owner-occupier mortgages would stay strong-if Britain stays in the EU.
‘We are expecting a market of about £240bn this year if the referendum vote is to stay in and there is no disruption that way. That is quite substantially higher than our original expectation of £220bn, the mortgage market is definitely flourishing,’ Gadhia stated.[1]
[1] https://www.estateagenttoday.co.uk/breaking-news/2016/5/brexit-would-mean-significant-hit-for-house-prices-warns-osborne