Homeowners are understandably confused by conflicting forecasts by campaigners on both sides of the EU referendum debate as to how the outcome may affect house prices, with some on the Remain side arguing the average UK home could be devalued by up to 20% in the event of a Brexit, claims that have been dismissed as scaremongering by Leave campaigners.
Analysts at Deutsche Bank and credit rating agencies S&P and Fitch warn that voting to leave the European Union would instantly reduce the value of UK houses, with the National Association of Estate Agents saying Brexit would reduce UK house prices by £2,300 and the average London house by £7,500. The International Monetary Fund also mentioned the possibility of house price declines, while a recent Treasury analysis suggested average house prices could be between 10 and 18 per cent lower than they would otherwise have been by 2018 in the event of a vote to leave.
Guy Gittins, Executive Director at Chestertons, says: "Homeowners' uncertainty is perfectly understandable given the huge variance between what impact the two camps are claiming Brexit would have on the UK housing market. A Brexit would be an unprecedented step, with no country ever having taken the step of withdrawing from the European Union before, so even the most qualified economists are really only 'guesstimating' what the probable fallout will be.
"What is most likely in the short-term is a continued period of uncertainty and falls in the value of sterling – the pound plunged recently on opinion polls showing the Brexit campaign holding a narrow lead, so currency markets are clearly very sensitive.
"The market fundamental that should not be overlooked is buyer demand – if investment falls off as some have claimed it will in the event of a Brexit then that could cause prices to fall back, likewise if huge numbers of renters decide to hold off on buying a property until the clouds of uncertainty have cleared. On the other hand a cheap pound would incentivise overseas buyers to take advantage and European buyers keen to hedge against the potential demise of the whole EU could also return in strong numbers.
"Sellers should also be realistic about what their homes are worth and not worry too much about political factors – price, position and presentation are all still key to securing a sale. The ongoing lack of homes on the market means demand is most likely to continue to outstrip for supply even in the event of Brexit, and this will create a floor or buffer to prevent prices falling drastically as has happened in previous property market crashes."