Osborne: House prices will fall by a fifth if we vote to leave EU
HOUSE prices will fall by almost a fifth if Britain votes to leave the European Union, George Osborne has claimed.
In his most significant intervention of the referendum campaign, Mr Osborne has said that a Treasury analysis found that a Brexit could hit the value of homes across the country by as much as 18 per cent.
According to his forecast, it would mean that the projected value of an average house in Britain could drop by more than £50,000 within two years compared to what it would be if the UK remains a member of the EU.
Eurosceptics on the Vote Leave campaign will attack the claims as “scaremongering” and an escalation of David Cameron and Mr Osborne’s “Project Fear” tactics.
The Treasury will next week publish a report on the short-term economic impact of a Brexit.
The analysis will warn that house prices will fall by at least 10 per cent and up to 18 per cent compared with expected growth if Britain stays in the EU. Mr Osborne’s report will also warn
that first-time buyers would also be hit because leaving the EU would cause mortgage interest rates to rise sharply.
With the average UK home costing £292,000, the Treasury analysis predicts that the fall in cash value of a property would be between £1,752 to £25,112.
The Office for Budget Responsibility is currently forecasting that house prices will rise by 9.4 per cent over the next two years, assuming we remain in the EU.
Therefore if the UK leaves, the Treasury claims the average house price will be £29,200 to £52,560 lower by 2018, compared to if we stayed in the EU. Speaking during a meeting of G7 finance ministers in Sendai, Japan, the Chancellor said Brexit would make mortgages more expensive and make it more difficult for first-time buyers to obtain a loan.
“If we leave the European Union there will be an immediate economic shock that will hit financial markets,” Mr Osborne told the BBC.
Andrea Leadsom, a Eurosceptic minister in the energy department, said: “This is an extraordinary claim and I’m amazed that treasury civil servants would be prepared to make it. The truth is that the greatest threat to the economy is the perilous state of the Euro.”