Uncertainty before the EU Referendum could lead to fewer house sales and reduce the number of new homes being built warns Knight Frank - and a clear ‘Remain’ would allow the market “to recover any lost ground relatively quickly.”
“Despite the resilience of the market to date, experience from the 2014 Scottish Referendum shows that we ought to expect a slowdown in housing market activity as we get closer to the poll date” warns Knight Frank’s Global Head of Research, Liam Bailey.
Whilst the recent slump in the value of the Pound may help make Prime Central London property more attractive to wealthy overseas buyers, Bailey says: “There is no doubt a clear ‘Remain’ vote would remove immediate economic uncertainty and market activity might be expected to recover lost ground relatively rapidly - this was certainly the experience in Scotland referendum.”
He says a ‘Leave’ vote would necessarily require a period of negotiation to establish the UK’s new relationship with the EU. “During this period it would be fair to assume the uncertainty would continue to influence investment decisions for businesses and individuals, particularly if the question of Scottish independence is raised again.”
Bailey accepts that the current market conditions - with demand outstripping supply - would probably not change in the short run whatever the result and that the effects of Brexit or Remain on the mainstream market may be relatively limited.
However, in a market comment issued by the agency, Bailey says: “An analysis of whether leaving the EU will result in a slow decline in the UK economy or herald a new expansionary future is well beyond the ambitions of this paper.”