UK vote on future in EU could impact housing markets

If the UK leaves the European Union, the move could have an effect on the country’s residential property markets, according to a new report.

The report from the National Association of Estate Agents ( NAEA) and the Association of Residential Letting Agents (ARLA) compiled with the Centre for Economics and Business Research (Cebr), highlights a number of short- and long-term implications potentially arising from the upcoming vote.

According to Mark Hayward, NAEA managing director, a leave vote could provide first time-buyers with breathing space as demand for housing would be expected to ease off.

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.

‘ The fact that rent costs would face downward pressure is both a blessing and a curse. While renters should face fair and reasonable prices, landlords need to be able to at least break even on any out goings they have, such as a mortgage,’ said David Cox, ARLA managing director.

‘If demand eases to such an extent that landlords cannot recuperate costs, we’ll likely see a mass exit from the market, which would then just have the opposite effect on demand as supply falls and we’d be back to square one,’ he added.

Mark Hayward also explained that it’s not as simple as saying that Brexit would have a positive or negative effect on the property market. ‘ We might like to believe, for example, that the ease in demand and lower prices will allow first time buyers a route into the market, but any transactions may be put off for the short term until the period of uncertainty is over,’ he said.

However, despite all the speculation, no one can be sure what will happen. Much of the hype in the media at present is in relation to if we leave the EU. But if the vote is ‘No’ then I can see the market continuing as before, with a buoyant rental market and high rental demand. We will just have to wait and see!