Chancellor sets out housing market fears over EU vote

He also added to the list of those warning that it would also affect the home lending market making mortgages more expensive. On this one he is hot on the heels of the IMF which has warned that mortgage interest rates would also rise because of financial market instability, meaning fewer people being able to get a mortgage and mortgage costs rising for all.

And this sits alongside warnings from Virgin Money’s Chief Executive, the CEBR, S&P, Fitch and Deutsche Bank about the potential negative impact on Britain’s housing market from a vote to leave the EU.

The Chancellor said finance ministers from other G7 countries attending the summit in Japan where he made his statement confirmed that in their assessment, leaving the EU could cause significant financial market turbulence, affecting families and businesses.

The Chancellor also challenged the idea that negotiating a new relationship with the EU would be easy if the UK votes to leave, warning instead that it would be a long, costly and messy affair. In the coming days, the Treasury is going to publish its analysis of what the immediate impact will be.

However, critics point out that any fall in prices is only compared with where they would have been if there was no vote for Brexit. The independent Office for Budget Responsibility predicts a rise of 9.4% over the next two years and a further 5% over the following year.

However, most home owners have seen the price of their home rise by 9% in the last 12 months, so the government forecast actually suggests that homes would be worth between 0.6% and 8.6% less in cash terms than they are now.

Indeed, former Cabinet Minister Iain Duncan Smith, a prominent campaigner for the UK to leave the EU, likened Osborne to the children’s fairy tale character Pinocchio whose nose grows longer the more lies he tells.

However, the short term impact is already being seen in the run-up to the vote on June 23. Estate agents and lettings agents are reporting a slowdown in sales and a waitand-see attitude. Lawyers are reporting that investors in commercial property are adding Brexit clauses to contracts allowing them to pull out of purchases if the outcome is not favourable.

On top of this, the National Association of Estate Agents (NAEA) and the Association of Residential Lettings Agents (ARLA) warn in a report compiled with the Centre for Economics and Business Research (Cebr) that while rents and prices could fall, this is not all bad news as it would help first-time buyers, especially in London.

What is worrying about this report is that it focuses beyond values. It points out that it could affect current plans to build hundreds of thousands of new homes due to the potential of greater restrictions on foreign workers coming into the UK would result in a shortage of construction workers.

International businesses are postponing investment in Britain in the wake of EU uncertainty, a new paper by the Royal Institution of Chartered Surveyors (RICS) has revealed.

The RICS EU Referendum Paper which examines the pros and cons of the UK remaining and exiting Europe includes new data showing that there has been a steady easing in international demand for UK office, industrial and retail property since the referendum was confirmed in Q2 2015.

The demand indicator among international investors for UK commercial property is now at its lowest level since RICS records began in 2014 with just 5% of members surveyed reporting increased interest from overseas companies over the last three months. This is a considerable drop from Q2 2015, when the figure was at 36%.

Uncertainty caused by the EU referendum has been cited by 38% of RICS members working within the sector as the reason why major international retailers and other businesses have been nervous of investing in Britain.

Should Britain leave the EU, 43% of respondents felt that it would have a negative impact on the commercial property sector and only 6% said a Brexit scenario would

Reduced migration would also affect the private rental sector. Currently, private renting is a more popular choice among UK residents born in other EU countries than for UK born individuals. The report says that if migration reduces the flow of renters from Europe, demand will weaken, which would put downward pressure on rent costs.

What is clear is that it is not as simple as saying that Brexit would have a positive or negative effect on the property market. While a fall in prices and rents might favour many, mortgage costs are also likely to rise, offsetting any benefit from lower prices and more supply.

Whatever happens, there will be a slowdown showing up in published figures for April, May and June in terms of prices, sales and rents. What happens after that will not be known until the referendum result is in. Roll on June 24.