A vote to leave the EU in next month’s referendum could wipe thousands of pounds off the value of houses nationwide claim estate agents.
A Brexit vote could see houses in London lose £7,500 and those outside the capital might drop by £2,300 says the National Association of Estate Agents.
But the report, jointly commissioned by the Association of Residential Lettings Agents (ARLA), says that rents could also fall.
The figures in the report suggest house prices in London would slump because there would be fewer EU nationals wanting to buy. In 2013, 17% of house sales in London were to immigrants from across Europe.
The research also suggests that, if Britain does not maintain free movement of labour after a Brexit vote, the population could fall by more than a million as EU nationals return home.
Separate research by ratings agency Moody’s claims a vote to leave could be good news for first time buyers.
First time buyers
Gary Trinkaus, a senior analyst at Moody’s, says: “First time buyers would benefit from lower competition for housing as house price and rental inflation would slow down if immigration is curbed.”
David Cox, of ARLA, says: “If demand eases to such an extent that landlords cannot recuperate costs, it’s likely we will see a mass exodus from the market, which would then have the opposite effect on demand as supply falls and we’d be back to square one.”
Meanwhile Chancellor George Osborne has been warning that a Brexit could well mean a hike in mortgage rates across the board.
The rate set for your mortgage follows market interest rates and if these rates shoot up as a result of Britain’s possible exit from the EU that means your mortgage payments will shoot up too.
The Chancellor has warned that a vote to leave would cause a ‘significant shock’ to the housing market.
“I’m pretty clear that there would be a significant hit to the value of people’s homes and to the cost of mortgages,” he said.
Britain’s base rate has been held at a record low for more than seven years after the Bank Of England acted to try to boost the economy following the financial crisis.
The current plan is to increase rates slowly as the economy continues to recover, but there have been warnings that a No vote next month could mean rates will increase higher, faster.
By how much?
It is impossible to say how quickly interest rates might rise, or by how much, but the Mirror newspaper has quoted the change during the financial crisis of 2008 when rates were cut from 5% to the current record 0.5% in just six months.
Mirror journalist Julia Rampen says: “Imagine that the other way round. If your mortgage was tied to the Bank’s rate, in less than a year your bills could go up by a factor of 10.”