Following George Osborne’s warnings that a Brexit could cause house prices to fall between 10% and 18%, a report from research firm Bernstein claims property values could drop as much as 30%.
In the Bernstein report senior analyst Chirantan Barua said that, although it does not expect Britain to vote to leave the EU on 23 June, if it were to happen “we wouldn’t be surprised to see house prices down 20% to 30%”.
He said this could be due to the fact that “the market is propped up by foreign investors and with sterling predicted to fall in the 20% range”, adding that volatility is likely to remain for at least a year post-event.
Chief executive of online estate agent housesimple.com, Alex Gosling, said the figures are based on speculation.
“If you believed everything you read, a Brexit will see property prices plummet as economic uncertainty hits demand and increases mortgage costs,” said Gosling.
“However, the reality is that no-one really knows what would happen if we left, which is why claims being bandied around, such as prices will drop 30%, are based on massive assumptions.”
He said that that the impact of the EU referendum on house prices is definitely being felt at the moment, but that is not surprising “when the remain versus leave race is closer than many people expected.”
He said, however, that demand remains strong at the moment and with a shortage of homes coming onto the market.
“Whichever way the vote goes, any drop in property prices may be a short-term dip,” said Gosling.
Jeremy Leaf, a former Royal Institute of Chartered Surveyors chairman and north London estate agent, said projected house price figures were speculative because nobody knows the outcome of a UK exit from the EU.
“If the UK does vote to exit then we are in unchartered territory, so there will be a period of uncertainty until people get a better idea of how the new world operates. It will take time,” said Leaf.
“There will be turbulence one way or another but with exit there will be longer term uncertainty. Whether we will become stronger in the long term who knows but any figures could be regarded as scaremongering or speculating as nobody knows whether they will go up down or remain the same.”
The only certainty is uncertainty, he said.