A report from the National Association of Estate Agents (NAEA) and the Association of Residential Letting Agents (ARLA) says that house prices would rise whether we stay or leave the EU. However, if we vote to leave the EU on the 23rd June, the rise would be less. The difference in London would be more marked in the event of a Brexit with price rises significantly lower than if the UK votes to remain. This would be caused mainly by less investment in London, foreign companies relocating away from the capital and reduced demand for commercial and residential properties.
A study compiled by the Centre of Economics and Business Research says that while a Brexit could cause a labour shortage in the housebuilding sector, it may help first time buyers onto the property ladder through lower house prices. The report further says that whilst there would be no immediate impact, rent prices could fall as a result of a Brexit. This would be especially marked in London where private renting is a more popular choice amongst residents from EU countries than for UK born individuals.
David Cox, the Managing Director of ARLA, believes that a fall in rents could create more housing issues. He says “The fact that rent costs would face downward pressure is both a blessing and a curse. While renters should face fair and reasonable prices, landlords need to be able to at least break even on any outgoings they have, such as a mortgage. If demand eases to such an extent that landlords cannot recuperate costs, we’ll likely see a mass exit from the market, which would then just have the opposite effect on demand as supply falls, and we’d be back to square one.”
Mark Hayward, the Managing Director of the NAEA, comments “Unfortunately, it’s not as simple as saying that Brexit would have a positive or negative effect on the property market. We might like to believe, for example, that the ease in demand and lower prices will allow first time buyers a route into the market, but any transactions may be put off for the short term until the period of uncertainty is over.”