Will ‘Brexit’ effect the UK Housing market?
Will ‘Brexit’ effect the UK Housing market? Investors and speculators eagerly await the forthcoming EU referendum, where the British public will vote if they are to remain in the European Union or leave the EU, is anticipated that an exit vote could have a profound impact on the economy in the UK, which in turn will affect the currency strength and housing market. Managing Director of the International Monetary Fund (IMF) Christine Lagarde, summarized that should the UK leave the EU the effects would be “pretty bad to very bad” and this would result in a “protracted period of heightened uncertainty”. Furthermore, The UK Treasury, the Organisation for Economic Cooperation and Development (OECD) and the IMF are of the believe that Britain will be permanently poorer because in the event of a ‘Brexit’ due to decreased trade with the EU. George Osbourne Chancellor of the Exchequer suggests that British house prices could fall by up to 18 percent if the country leaves the European Union, however many journalists and commentators have dismissed this claim as scaremongering in order to shape the opinion of the voters. Treasury chief George Osborne said leaving the EU would be a “profound economic shock” that would lower property values and raise mortgage rates.Treasury analysis estimates property prices will be worth between 10 and 18 percent less by 2018 if Britain leaves than if it stays. The UK house price average have risen 9 percent from March 2015 to March 2016, and the property prices in London have risen so much so the average property price is now at a ratio of over 1:10 the average annual household income! Some believe a period of downward pressure on property prices may be a positive to allow new buyers to enter the market who otherwise may be priced out. However, the cost of borrowing could rise, making mortgages more less affordable. The fall in market activity from international investors would lower confidence among property developers to build. Warnings have been issued that should the UK leave would destabilize the economy. Furthermore, the Bank of England Governor, Mark Carney had gone so far to say that if the vote is to exit at the EU referendum the repercussions of this could tip the UK into recession. Contrasting opinions state that the UK would be better off leaving the UK. Will ‘Brexit’ cause a property slump? Well the exit vote campaigners such as Energy Minister Andrea Leadsom are more fearful of the Euro than the possible affect on UK house prices should the UK exit on June 23rd. Stating that “the greatest threat to the economy is the perilous state of the Euro.”, and in the vote on the 23rd of June, the UK would be in a better position to regain control of the vast sums sent to Brussels The vote is now a few weeks away, recent polls conducted, suggested that 60% of those questioned would vote to remain in the EU, only 36% said they would vote to leave. The survey also included more than 300 investors, property developers and advisors, the findings were that the mood was considerably down beat among investors with 68% saying they would be pessimistic in the event of the UK exiting the EU, contrasting this with the 11% saying they would be optimistic. Furthermore 70% of developers and 77% of agents would remain optimistic should the UK remain in the EU. Will ‘Brexit’ effect the UK Housing market? Yes, the uncertainty has caused a slowdown of activity due to the short term uncertainty in the lead up to the vote, the general consensus is that the market will experience a slow down and prices may cool as a result, but the long term asset values will rebound once confidence is restored should the UK ‘Bremain’. In the event of a Brexit, there will be a potential dip in the value of the pound leading to increased appeal from overseas investors from the Middle East and Asia. Property Investors from the United Arab Emirates, Kuwait, China and Hong Kong in particular have been investing heavily in UK property in recent years. In the event of a Brexit, it is unlikely property prices will experience sharp falls, Brexit may dampen house price growth, but the under supply of available housing will ensure sustained property demand. Should the UK vote to leave the EU, it would represent unique opportunities for investors buying property with a mid to long term view.
Will ‘Brexit’ effect the UK Housing market?
Will ‘Brexit’ effect the UK Housing market? Investors and speculators eagerly await the forthcoming EU referendum, where the British public will vote if they are to remain in the European Union or leave the EU, is anticipated that an exit vote could have a profound impact on the economy in the UK, which in turn will affect the currency strength and housing market. Managing Director of the International Monetary Fund (IMF) Christine Lagarde, summarized that should the UK leave the EU the effects would be “pretty bad to very bad” and this would result in a “protracted period of heightened uncertainty”. Furthermore, The UK Treasury, the Organisation for Economic Cooperation and Development (OECD) and the IMF are of the believe that Britain will be permanently poorer because in the event of a ‘Brexit’ due to decreased trade with the EU. George Osbourne Chancellor of the Exchequer suggests that British house prices could fall by up to 18 percent if the country leaves the European Union, however many journalists and commentators have dismissed this claim as scaremongering in order to shape the opinion of the voters. Treasury chief George Osborne said leaving the EU would be a “profound economic shock” that would lower property values and raise mortgage rates.Treasury analysis estimates property prices will be worth between 10 and 18 percent less by 2018 if Britain leaves than if it stays. The UK house price average have risen 9 percent from March 2015 to March 2016, and the property prices in London have risen so much so the average property price is now at a ratio of over 1:10 the average annual household income! Some believe a period of downward pressure on property prices may be a positive to allow new buyers to enter the market who otherwise may be priced out. However, the cost of borrowing could rise, making mortgages more less affordable. The fall in market activity from international investors would lower confidence among property developers to build. Warnings have been issued that should the UK leave would destabilize the economy. Furthermore, the Bank of England Governor, Mark Carney had gone so far to say that if the vote is to exit at the EU referendum the repercussions of this could tip the UK into recession. Contrasting opinions state that the UK would be better off leaving the UK. Will ‘Brexit’ cause a property slump? Well the exit vote campaigners such as Energy Minister Andrea Leadsom are more fearful of the Euro than the possible affect on UK house prices should the UK exit on June 23rd. Stating that “the greatest threat to the economy is the perilous state of the Euro.”, and in the vote on the 23rd of June, the UK would be in a better position to regain control of the vast sums sent to Brussels The vote is now a few weeks away, recent polls conducted, suggested that 60% of those questioned would vote to remain in the EU, only 36% said they would vote to leave. The survey also included more than 300 investors, property developers and advisors, the findings were that the mood was considerably down beat among investors with 68% saying they would be pessimistic in the event of the UK exiting the EU, contrasting this with the 11% saying they would be optimistic. Furthermore 70% of developers and 77% of agents would remain optimistic should the UK remain in the EU. Will ‘Brexit’ effect the UK Housing market? Yes, the uncertainty has caused a slowdown of activity due to the short term uncertainty in the lead up to the vote, the general consensus is that the market will experience a slow down and prices may cool as a result, but the long term asset values will rebound once confidence is restored should the UK ‘Bremain’. In the event of a Brexit, there will be a potential dip in the value of the pound leading to increased appeal from overseas investors from the Middle East and Asia. Property Investors from the United Arab Emirates, Kuwait, China and Hong Kong in particular have been investing heavily in UK property in recent years. In the event of a Brexit, it is unlikely property prices will experience sharp falls, Brexit may dampen house price growth, but the under supply of available housing will ensure sustained property demand. Should the UK vote to leave the EU, it would represent unique opportunities for investors buying property with a mid to long term view.
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