Uncertainty over the outcome of the EU referendum is expected to slow the UK housing market in the next few months, according to property firm Hometrack.
The company, which supplies data to mortgage lenders and property developers, reports that the amount of home sales in the country’s 20 biggest cities already dropped by 2% last year and activity is likely to fall further in the run up to the 23rd June vote.
The Director of Research at Hometrack, Richard Donnell, comments: “After a three-year upturn in housing market activity and house prices, the outlook for the market appears increasingly tied up with policy impacts and the potential outcome of the referendum, rather than the operation of market forces.
EU Referendum Uncertainty Could Slow Housing Market, Believes Hometrack
“Businesses operating in housing face risk and uncertainty, which will have to be managed and monitored carefully.”1
Yesterday, CBRE said that property investors and owner-occupiers are likely to behave in the same way as they did in Scotland ahead of its 2014 independence referendum, by delaying decisions until after the vote.
It stated: “After the Scotland referendum, there was a catch up effect and CBRE expects the same for the UK, assuming that it decides to remain in the EU.”1
A survey of its investor clients found that almost three-quarters felt that the UK would be a worse place to invest in if it leaves the EU.
Activity in the housing market slowed ahead of last year’s general election, especially in London’s prime property market, where buyers were worried about the possibility of a mansion tax.
Donnell reports that there is evidence of a 10% decline in sales in Scotland during the 18 months before its independence referendum in 2014. Buyers were concerned about the threat of businesses relocating if voters chose Scottish independence.
He believes that a vote to remain in the EU would trigger a return to housing market activity in the second half of 2016, while a vote to leave would raise uncertainty and dampen activity over a longer period.
The latest UK cities house price index from Hometrack shows that property values continued to increase in 2015, recording an average rise of 10.2% over the year.
Double-digit price growth was recorded in London, Cambridge, Oxford and Bristol. The average house price in the capital rose by 13.4%, to £455,100.
As buy-to-let landlords are currently rushing into the housing market ahead of the 1st April Stamp Duty deadline, it is also likely that activity will dampen after this date.
1 http://www.theguardian.com/business/2016/feb/26/eu-referendum-uk-housing-market-hometrack