How Might the EU Referendum Affect the Housing Market?
It’s more than three years since Prime Minister David Cameron pledged to hold a referendum on the UK’s membership of the European Union (EU). And, following his recent stint around the Brussels negotiating table, the electorate are going to get the chance to have their say on June 23rd, as Britain goes to the polls.
Britain’s future either in or outside of the EU is clearly a matter that’s likely to have some significant ramifications, depending on the outcome of the referendum. A quick look across the political, social and economy sections of the national media will show you a near tidal wave of differing opinions and figures about what the implications of staying or exiting might be. And, of course, the UK property market is not immune.
The property market is an environment always susceptible to the effects of major events, and the EU referendum certainly falls into that category. And while there’s no real reason to think that UK property is going to become less of an investment opportunity in the long term, regardless of outcome, one still needs to reflect upon and appreciate the effects that both the debate, and subsequent aftermath, is likely to have.
If we take the Scottish independence referendum of 2014 as a recent example, you might find evidence in certain quarters of a pre-referendum slow-down in property transactions. However, this tended to be in certain regional areas on certain house types; notably larger town house properties in the larger cities (Glasgow & Edinburgh in particular) where independence might have meant relocation to England for some professionals.
Can this be used as an indicator to the months leading into the EU vote?
It’s certainly possible that the market will slow to some extent over a short period as the referendum looms ever larger. A socio-political decision of such gravity is likely to bring with it a degree of uncertainty given that no-one knows exactly what the outcome is going to be.
However, the UK has been aware of an impending in-out referendum for more than three years, during which time the market has shown a steady increase, showing little sign that the ‘EU issue’ has had too much of a bearing on things.
Key Factors remain UK-Centric
Should the UK vote to leave the EU in the June referendum then it is possible, although certainly not inevitable, that there would be some impact on foreign investment patterns while the Government re-negotiates with its former European partners. The reality, of course, is that the actual repercussions of such an occurrence remains an unknown.
That being said, it’s worth looking at the key factors which currently have the most impact on the UK property market.
The increase in the property investment market across the UK over recent years has been based very firmly upon the fact that demand for affordable properties remains significantly higher than current availability. This on-going, and relatively urgent, need to invest in new housing developments is very much a UK-centric issue and one that’s likely to continue into the next decade. It’s hard to envisage why any potential change in the relationship between the UK and Europe would alter that.
As June 23rd approaches and the in-out debate heats up, it might indeed result in a briefly subdued period as investors await the results. Yet, while the decision to remain within or exit the EU will assuredly have some impact on the country as a whole, the current shortfall of property in the UK and continued high demand suggests enough reason to think that the buoyancy and opportunity will remain for the foreseeable future, regardless of the outcome.