A property investment firm says a British exit from the EU may cause minimal damage to the prime London market and could lead to circumstances where the capital would become more attractive to overseas investors.
London Central Portfolio, an investment service, says that recent comments by Chancellor George Osborne and others - who say political and economic uncertainty in the build up to a referendum and perhaps soon afterwards may lead to a housing market slowdown - may well be right, if the evidence of past General Elections is repeated.
But it says that while a ‘Remain’ vote would mean “a return to the status quo and a hardening of prices” there are some upsides to a ‘Leave’ vote, too.
“It is notable that the EU has only played a limited role in attracting international capital to the London property market. According to LCP’s latest audit, only 12 per cent of buyers are from Europe. An unlikely total withdrawal of this sector will have very little net effect on property prices as a whole” insists LCP.
It says Europeans and international investors outside Europe are attracted to prime London by its reputation as a cultural, educational and financial centre, together with its rule of law, political and economic stability - all factors which it claims would be unaffected by a UK Brexit.
“From a property perspective, people will be attracted to this, whether or not the UK is a smaller power outside the European block” says the firm.
It then suggests that currency devaluation following a Brexit should actually increase London’s attractiveness to international investors.
“This year, Brexit uncertainty has driven Sterling to lows not seen since the global credit squeeze. US$ denominated investors, such as those in the Middle East for example, have been enjoying discounts of almost a fifth, thereby cancelling out the cost of the new three per cent additional stamp duty” says LCP.
It says the investment bank Nomura has predicted a further 15 per cent fall in the pound as a result of Brexit “and this continued depreciation is likely to augment the global attractiveness of PCL property further.”
However, LCP admits that property outside prime London “will not benefit from this currency move.”
Earlier this week Chancellor George Osborne warned mainstream house prices would take "a signficant hit" if Britain left the EU.