What would a vote to leave the European Union mean for homeowners and those trying to get on the ladder?
As outlined below, many economists and politicians believe house prices will slump should Britain vote to leave the EU, driven lower by falling demand. At the same time, it is argued that the shortage of housing in the country won't improve because a Brexit will sap investment into new homes and curb immigration of much-needed skilled workers into the construction sector.
However, the big caveat to bear in mind, whatever side of the fence you stand on, is that these figures are based on big assumptions. No one actually knows what will happen. Forecasters, from the Treasury to the IMF, very often get their figures wrong. Moreover, statistics can be manipulated. Prices in the property market are really based on confidence, and that is something that cannot be easily predicted by economists.
So, what are the numbers?
Several figures have been bandied around by various politicians and commentators. George Osborne, the Chancellor, warned that house prices could fall by 10pc to as much as 18pc by 2018 in the event that the British people vote to leave the EU. However, the calculation used to determine the rate of decline is based on today's house prices, rather than prices in two years' time, which are forecast to be about 10pc higher than they are today. If you account for that, the worst-case Brexit scenario would be an 8pc decline in prices, according to the Treasury.
Ratings agency Fitch has said that house prices could crash by25pc in the event of a Brexit, and added that the value of sterling would drop by nearly a third against a basket of other currencies by the end of 2016.
This would bring house prices back to a more affordable level. Fitch said: "UK house prices are currently up to 25pc above 'sustainable' levels in relation to disposable income. This scenario could result in near-term price declines that result in house prices falling towards their sustainable level."
A report by the Centre for Economics and Business Research forecast that leaving the EU could reduce the total value of UK housing by £26.5bn by 2018.
Why are people saying house prices will fall as a result of Brexit?
Mark Carney, governor of the Bank of England, has said that a vote for Brexit “could possibly include a technical recession”, and said that mortgage costs for homeowners could rise even if the Bank cut interest rates to boost demand.
If there is a recession and banks won't lend, or if buyers lose confidence in the market, there will be less demand and therefore prices will come down.
The International Monetary Fund said that it could trigger “sharp drops in equity and house prices, increased borrowing costs for households and businesses, and even a sudden stop of investment inflows into key sectors such as commercial real estate and finance”.
This is due to a period of uncertainty and volatility that would follow a vote to leave, which the IMF said would lead to "financial market volatility and a hit to output".
Where will be the hardest hit?
London, by far, according to some analysts. It is a volatile property market, and more prone to external shocks.
A report by ratings agency Moody's said that a Brexit would have the biggest impact on the capital's housing market, and would lead to fewer sales to EU nationals in central London, which would lead to lower house prices.
It also said properties worth more than £1m would be most affected; 49pc of homes in this band are bought by foreign nationals.
Richard Donnell, head of research at Hometrack, has forecast a 5pc to 10pc fall in the number of houses bought and sold in the UK in the next two years if we leave the EU. But this is the new normal for London: last year the number of transactions fell 7pc due to affordability constraints and weak overseas demand.
Conversely, if the pound falls, London may become an even more attractive market for foreign buyers, because their money can go further. Luxury homes in London are largely bought by non-EU foreign nationals, who would not be affected by any immigration clampdown.
Will it mean lower prices for first-time buyers?
If London becomes less attractive as a place to live after a Brexit, or if immigration is curtailed upon the event of leaving the EU, competition for housing would decrease, said Moody's.
This would slow down house price inflation and rental growth, so first-time buyers would benefit.
Having said that, if a Brexit does lead to an economic crisis, restricted mortgage lending and job losses, it will affect young people the most. So even if prices fall, affordability will not necessarily improve.
What about rent prices?
If many foreign nationals who live in the UK have to leave as a result of stricter immigration laws, this would lessen the competition for rental properties and so, in theory, lead to lower rents.
This would affect London the most, where 37pc of residents are foreign-born nationals (figures from 2014), and 11pc of the population is from the EU.
Foreign-born nationals are three times more likely to be renters than British-born residents, according to the Migration Observatory.
Brexit may also lead to a reduction in demand for rented homes from the 125,000 EU students attending universities in UK, which could lead to lower rents in cities with big student populations such as Manchester, Birmingham and Nottingham.
But Brexit may cause a supply crisis in the rental market: if landlords are unable to afford higher mortgage repayments due to worse economic conditions, they may sell up.
Will Brexit solve the housing crisis?
There is currently a housing crisis because there are not enough homes. The Government pledged last year to build one million homes by 2020, but it's way behind target.
Voting for to leave the EU will not magically increase supply, even if it prices do fall. In fact, it might slow it down construction of new homes: Moody's has said that an 'out' vote risks causing a major shortage in skilled construction workers.
Currently, about 12pc of construction workers are EU nationals. Hansen Lu, of Capital Economics, said: "Given that it takes years to train skilled tradesmen, immigration reflects the easiest route to meeting the current labour shortage. Thus, if it compounded existing labour shortages, Brexit could have a lasting, dampening effect on housing starts."
A Brexit may also hold back investment into new developments. A recent poll by KPMG of 25 global real estate investors with assets under management of more than $400bn revealed that two-thirds believe a Brexit would result in less investment into UK property.
However, Simon Rubinsohn, the chief economist at the Royal Institution of Chartered Surveyors, said that house prices would continue to rise because of sheer demand.
He said: "All indications suggest that whatever the outcome of the...referendum, in the long term, the imbalance between demand and supply will still exert a strong influence on the market, with house prices expected to rise by close to 25pc over the next five years.”
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