With all the discussion around a Brexit I thought it would be interesting to examine how it may affect the property market should the UK choose to leave.
When Boris Johnson came out in support of a British exit from the EU Sterling fell sharply against the US Dollar. Some investment banks have warned that Sterling could fall even further as investors flee should Britain decide to leave on the 23rd of June.
According to a survey of investors done by CBRE 73% think the UK would be a worse place to invest in. So what could this mean for the property market? In London especially, foreign investors put their money into property as a safe haven. However with uncertainty around the sterling and the EU these investors may choose to sell up rather than risk losing value especially when the majority of the wealthier Eurozone citizens have used London property to escape the sovereign debt crisis. Some people think a fall in foreign investors in the capital would be beneficial as property developers should be building more homes for Londoners to live in and not for investors to purchase as assets.
Investment from overseas boosts the economy though and has helped create a record number of affordable homes for low income Londoners.
Elsewhere in the country analysts expect there shouldn’t be too much of a change as demand for housing still outweighs supply as more people try to get on the property ladder. However, there may be an effect on the market in the lead up to the referendum as potential buyers and investors slow spending and wait until after a decision has been made, much like the Scottish independence referendum in 2014. If we see a decision to remain in the EU on the 23rd of June there will likely be a catch up period after.