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03/06/2016

The referendum and housing

 

With the EU referendum creeping ever closer, Remarkable takes a quick look at the
possible outcomes for a Remain or Brexit vote and what it means for the housing
sector.

This week's headlines have been, as usual, dominated by the EU, with Liam Fox MP claiming that
young people will struggle to get on the housing ladder if the UK stays in the
European Union. This of course, may be true, especially as open borders and
immigration puts an extra strain on an already limited housing stock,
inevitably causing prices to rise. Could Brexit therefore solve the UK’s
housing crisis? A leave vote could certainly be welcome news for first time
buyers with house prices estimated to fall by as much as 25%. The National
Association of Estate Agents and the Association of Residential Letting Agents
have also claimed that a leave vote could see demand fall, leaving renters
facing fairer and more reasonable prices, although this could mean landlords
bearing the brunt in terms of mortgage repayments.

On
the other side of the coin, a vote for Brexit may cause severe implications for
the housing market. Even before the vote, foreign investors are postponing
decisions until the results are announced - there is nothing markets fear more
than uncertainty and a June exit from the EU will only compound the decline of
foreign investment in the short-term at least. On a more practical point, the
UK is heavily reliant on EU labour and the ability to access a large pool of
cheaply skilled migrants. Exiting the EU would therefore hit the construction
industry hard with new builds stalling and the beginning of a fresh skills
shortage – a nightmare scenario for the Conservative Party and their ambitious
target of 1 million new homes by 2020.

Like
much of the debate until now, nothing is clear and the housing sector is a
prime example. What is certain though is that Conservatives housing legacy
hinges on the 23rd June.

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