With a referendum on the United Kingdom’s future role in the European Union (EU) set for June 23, despite Prime Minister David Cameron’s best efforts last week, British online estate agent eMoov.co.uk has predicted an EU exit could see U.K. house prices drop by as much as 5 percent.
The wealth of financial and economic implications of an EU exit stretch far beyond the U.K. property market however, for many U.K. residents the impact to property prices will be their primary concern as their home is the most expensive asset they are likely to ever own.
The firm recently surveyed more than 1,000 British homeowners and found 55 percent believed leaving the EU would impact the value of their property (34 percent think they could increase, 21 percent think they could decrease).
Since Great Britain joined the EU in 1973, the average house price has increased by more than 2,000 percent it believed that it won’t necessarily be leaving the EU itself that could see house prices drop, but the uncertainty amongst homeowners and buyers as to what will happen next.
eMoov believed that an EU exit would cause a nervous ripple effect across the U.K., with homeowners and potential buyers choosing to baton down the hatches and weather the potential uncertain economic storm before committing to such a notable financial decision. Will unemployment rise? GDP fall? Could exports fall, causing businesses to fail?
The resulting potential reduction in demand for housing will almost certainly cool the market and, as a result, house prices will reduce in turn to reflect this. In an already inflated U.K. market this could lead to a potential loss of £11,000 to the average U.K. homeowner.
Founder and Chief Executive Officer of eMoov.co.uk Russell Quirk, said: “Should the U.K. public vote to leave the EU, we believe it could have a detrimental knock on effect to the U.K. property market.
“We’ve been part of the EU for more than 40 years now, so it’s understandable that such a momentous change will lead to uncertainty among the U.K. public, as to the resulting implications an exit will have on them.
“This air of uncertainty will lead to inaction among those looking to buy and sell and a resulting dwindling in demand, That will always lead to a reduction in house prices. We believe it could easily drop by 5 percent, maybe more, so the average U.K. homeowner could see their property reduce by £11,000 in value.”
