What does an EU ‘in’ vote mean for the UK property market?
The referendum will be held on June 23 but what do housing market experts think about an ‘in’ vote?
The only certainty about the impact on the property market if Britain were to vote to stay in the EU on June 23 is that there would be a lot less uncertainty. People who have lain awake at night spooked by worst-case scenarios in the case of Brexit would sleep easier in their beds. It would be back – more or less – to business as usual.
But even without Brexit vote, the summer of 2016 is not likely to be an entirely normal one as far as the property market is concerned. How many people, buyers and sellers alike, have been delaying their moves until the result of the referendum is known? And what will be the impact on the market of a sudden flurry of activity post-referendum? Late June normally marks the start of a quiet period in the housing market. This year could be a bit different.
According to figures from the property company Hometrack, in the 18 months leading up to the Scottish referendum in September 2014, property sales dipped by about 10 per cent. After that, there was a six-month period of catch-up. It was the same story before and after the 2015 general election. People bided their time until they had discovered whether there would still be a Conservative government or a Labour one determined to introduce a mansion tax and other fiscal measures with implications for homeowners.
The slowdown in market activity in the run-up to the referendum is likely to see a temporary dampening down of house price inflation. The spring, normally a hectic time, will be quieter than usual. But experts are not expecting prices to skyrocket from the morning of June 24 in the event of an ‘in’ vote.
“There is no doubt that such an outcome would remove any immediate economic uncertainty and market activity might be expected to recover any lost ground quite rapidly,” says Liam Bailey, Knight Frank’s Global Head of Residential Research. “That was certainly the experience following the Scottish referendum.”
But Bailey, like many experts, believes that the significance of the EU referendum in the context of the UK property market has been overstated in some quarters. “There is every reason to believe that the impact on the housing market would be relatively benign, whatever the outcome. That is because the mainstream housing market is primarily driven by domestic dynamics – notably the imbalance between supply and demand which is underpinning current housing market trends.”
Stuart Mills of Jackson-Stops & Staff in Wimbledon Village says: “We had an office meeting about the possible ramifications of Brexit a few weeks ago, and I made the tongue-in-cheek point: ‘Will the vote change anything either way? After all, the weather in Wimbledon will still be the same.’”
Mills believes that, while many of his clients have suffered from recent rises in stamp duty affecting second homes, even in the event of Brexit, it would take so long for the UK’s future relations with the EU to be sorted out that any knock-on effects on the property market would be quite limited. Similarly, a vote to stay in the EU would be generally welcomed but not to the tune of dancing in the streets.
Mark Granger, chief executive of property consultants Carter Jonas, said: “As we saw before the referendum on Scottish independence, many occupiers and investors delayed their decision-making. We expect a similar ‘wait-and-see’ approach as the EU referendum draws near, which could impact on sentiment and activity.”
As a general rule, few things cause more tremors in the housing market than political uncertainty. So most property professionals are likely to breathe a small sigh of relief in the event of an ‘in’ vote on June 23.