U.K. House Prices Could Drop 18% After Brexit, Treasury Saysby and
New Treasury analysis sees a poorer Britain outside the EU
British homes worth at least 10% less by 2018, study finds
British house prices would take a severe blow in the years immediately after a vote to leave the European Union, according to an analysis by the Treasury.
The study concludes that prices would be between 10 percent and 18 percent lower by 2018 relative to their performance inside the EU, according to the Treasury. However, Chancellor of the Exchequer George Osborne insisted this wouldn’t be good news for people trying to buy houses because mortgages would become more expensive and harder to get. The Treasury will publish its full analysis of the short-term consequences of a Brexit next week.
“If we leave the EU there will be an immediate economic shock that will hit financial markets,” Osborne told the BBC at the Group of Seven finance ministers’ meeting in Japan on Friday. “People will not know what the future looks like. And in the long term, the country and the people in the country are going to be poorer. That affects the value of people’s homes. And at the same time, first-time buyers are hit because mortgage rates go up, and mortgages become more difficult to get. So it’s a lose-lose situation.”
Osborne has been at the forefront of efforts to warn voters of the potential dangers of leaving the EU. With just over a month to go until the June 23 vote, it seems to be paying off. Betting markets have seen a shift to the “Remain” side. On Betfair, the implied probability of a Brexit was 21 percent on Friday. The Number Cruncher Politics implied probability fell to a new low of 18.9 percent. The pound had its first weekly gain of the month against the dollar.
Vote Leave, the official Brexit campaign, questioned the accuracy of the Treasury’s analysis.
"This is an extraordinary claim and I’m amazed that Treasury civil servants would be prepared to make it," said Energy Minister Andrea Leadsom, who is campaigning to leave the EU. "The safer option in this referendum is to take back control of the vast sums we send to Brussels every day and vote leave."
Fifty-five percent of respondents to a Comres poll published Thursday cited the economy as one of the three most important factors influencing their decision. It showed 52 percent backing continued membership of the EU while 41 percent supported leaving.
Concern over immigration is the strongest area for those arguing for Britain to quit the EU. Vote Leave announced on Friday that as many as 5.2 million people could come to the U.K. from the EU by 2030 if the U.K. remains in the bloc.
Michael Bloomberg, the founder and majority owner of Bloomberg LP, the parent of Bloomberg News, has publicly supported the campaign to keep the U.K. in the EU.