UK property caught in EU referendum crossfire

The bitter war of words between pro-European and anti-European supporters has reached new levels over the last few days. Unfortunately the UK property market has been caught in the middle of this EU referendum crossfire and many investors cannot wait for it to end. Chancellor of the Exchequer George Osborne has been accused of scaremongering by suggesting a fall in UK property prices and an increase in mortgage costs should the UK leave the European Union. He has also hinted that a detailed report will be released by the Treasury over the next few days highlighting the impact that a so-called Brexit would have on the UK economy.

Investors sitting on the sidelines

It is not just the UK property market but right across the UK investment arena many investors are now waiting to see exactly what will happen. The polls suggest a very close run affair with the most recent figures indicating a 45%/44% split in favour of leaving the European Union. Those who have yet to make up their minds could well be the kingmakers in this very important decision.

There is no doubt that unravelling the U.K.’s membership of the European Union would take many years in light of an exit vote. Despite denials by those in favour of the UK leaving the European Union there will almost certainly be a period of uncertainty and increased risk. How this would pan out remains to be seen, how long it would last is uncertain but the worst thing that any investment market requires is uncertainty.

Who is telling the truth?

The situation surrounding the UK EU referendum is so complicated and unique that either side is able to claim an array of different outcomes without necessarily being untruthful. The simple fact is that nobody knows how this will pan out, if the UK was to leave the European Union, and therefore the pro-European campaign are determined to increase the noise surrounding a fear factor strategy.

In some ways we can look at the recent Scottish independence referendum which eventually settled on Scotland retaining its membership of the UK. The infighting, the threats to business, the uncertainty and the continuous fallout from this vicious referendum still have remnants today. Today we only need to look at the Conservative party to see friends pitted against each other in what is becoming an ever more bitter war of words.

Not long to go

On 23 June the UK population will have the opportunity to vote on continued membership of the European Union and the issue will finally be put to bed. There are two main factors coming into play, nobody really knows how an exit would pan out and whether indeed it would impact long-term trade agreements between the UK and current trading partners. The other factor, one which pro-European supporters are acutely aware of, is that it is difficult to get supporters in favour of continued membership off their seats and voting because effectively they are voting for no change – historically a difficult challenge.

While pro-European campaigners in the UK government are adamant that they will eventually win the vote, this will be extremely close. Could it precipitate a breakup of Europe? Could the UK be cast aside by former allies? Would the UK property market be more or less attractive to overseas investors?

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