As the European Union Referendum looms closer it appears that it’s not just Britons who are considering whether or not they want to stay in the EU. There are growing signs that this important referendum is the cause of increasing uncertainty in the UK’s housing market.
Investors in particular are hitting the pause button on their purchase plans and it’s not just because the Government’s new stamp duty land tax rules are now in place. There is real uncertainty over Britain’s future in the EU which means there is uncertainty over what will change if the UK votes to leave it and how that might impact trading, the economy, businesses and investors.
The Royal Institution of Chartered Surveyors said in its latest housing survey for March that the average residential property sale price had risen at a slower pace. And that sales expectations for the next three months fell into negative territory for the first time in around eight years.
“Elections inevitably bring with them periods of uncertainty in the market, and our figures would suggest that next May’s devolved elections are no exception,” said Simon Rubinsohn, the RICS chief economist. “Likewise, the EU referendum, is likely to be an influencer in terms of the damper outlook for London in particular.”
Chancellor of the Exchequer George Osborne and the Treasury, meanwhile, recently unveiled figures that show the average British household will be £4,300 worse off per year. That figure was reached by crunching a lot of numbers relating to trade, the economy and business – things that all affect how business is done in the UK, the types and size of companies the UK currently attracts and whether or not the UK will remain the right place to operate from if the country leaves the EU.
The Treasury calculations concluded that businesses that remain could be worse off if new rules come into play if the UK does leave the EU. That suggests that some businesses will leave the UK – taking their jobs and tax payments with them. With less paid work and fewer tax receipts there will be less money around to buy property and fewer people to invest in it too.
Of course, the UK might very well vote to remain in the EU which means that none of this will come to pass. However, in the months leading up to the referendum things will likely remain uncertain so potential home-buyers – particularly investors from overseas – are likely to need lots of tempting to increase their investment in UK property.
There are examples of this already happening. According to a recent article in the Evening Standard, the prime London market is suffering and discounts of up to 30% are being offered in order to sell both off-plan new-build apartments and larger, luxury homes.
It remains to be seen what the outcome of the June referendum will be, but if these numbers are to be believed, business and investors in particular will be hoping for an ‘in’ vote. As well as meaning companies can continue pretty much as they are, an ‘in’ vote should reassure investors the housing market can recover from any wobbles too.