All markets abhor uncertainty, including the UK’s property market, which is perhaps the only thing that is certain as we rapidly approach the 23rd June and the EU referendum.
Despite the noise around the referendum and the impact on our housing market, it’s worth keeping in mind that the EU referendum is just one piece of the property puzzle. There are a range of factors in the balance including interest rate rises, the extra 3% stamp duty set to be levied on second homes as of April 2016 and international investors, particularly from China, becoming more timid in their investments in property following their own economic crises. All these components could have a greater impact on the market than leaving the EU.
Apart from individual prospective buyers and sellers being spooked by the as yet unknown consequences of potential Brexit, for the vast majority of British people the housing market and the transactions they enter into throughout their lives, are a domestic issue confined to the borders of the UK. However, the issue will come, if we do leave, of how we are perceived by international players as a place to invest and also as a place to live.
As part of the EU, this country has benefited from the economic influence that the organisation exerts on a global platform.
Last year, a report from global accountancy giant EY highlighted the UK as demonstrating outstanding performance in attracting direct foreign investment. If we leave the EU, would this investment be less forthcoming and would international players view our property market less favourably? The jury is out. The UK, both in and out of the EU, has been revered as an economic super power; but now the power hungry days of the British Empire are behind us, does being part of a large economic body matter more than ever?
Nick Leeming, Chairman at Jackson-Stops & Staff, comments: “If in June the UK opts to remain within the EU, we’ll quickly be back to business as usual. However, severing our ties with Europe is a quagmire of unknowns, particularly because we don’t know what a post-EU UK deal looks like.
“In the run up to the referendum we certainly anticipate a normal level of anxiety from people who might otherwise have entered the property market or put their home on the market. The world will be watching as we cast our ballots and the big question is how global players will perceive an exit and the subsequent impact on property investment in the UK.
“Of course, London will feel the effect if investors are deterred, but Northern cities will also share some of the impact as areas there, Manchester for example, still offer strong yields with capital appreciation and are increasingly popular among overseas investors.
“There is a whole range of factors influencing the direction of our housing demand, not just the referendum, which means 2016 has the potential to be a significant milestone for the direction of this country’s property market.”