Brexit would mean 'significant hit' for house prices, warns Osborne

Brexit would mean 'significant hit' for house prices, warns Osborne

Chancellor George Osborne has moved his campaign for the UK to remain in the EU on to housing issues with a claim that Brexit would mean “a significant hit†for prices.

He told Robert Peston on ITV: “You will see the analysis we [the Treasury] will do, but I'm pretty clear that there will be a significant hit to the value of people's homes and to the costs of mortgages. That is one example of the kind of impact, economic impact, that we get from leaving the EU.â€

In the interview he said: “I think it's very important for people to think about that and we are going to be producing some more research on that in the coming weeks. It's already clear from the Treasury analysis that for example, there would a significant shock to the housing market, that would hit the value of people's homes, that would hit the cost of mortgages.â€

He continued: “We're doing the work on it now but the emerging Treasury analysis backs up what you are hearing from major banks like Virgin Money that the value of people's homes will be affected and people trying to get on the housing market would be hit because mortgage costs would go up.â€

Last week the chief executive of Virgin Money, Jayne-Anne Gadhia, warned that departing from the EU could push British house prices down and interest rates up.

"My personal view is that property prices would be likely to come down, as inward investment, particularly in London, is less available. The risk on a Brexit is I think that property prices come down and interest rates go up."

Gadhia said although buy to let lending would inevitably fall back during the year after the passing of the stamp duty surcharge deadline, she said demand for owner-occupier mortgages would remain strong - but only if the UK stays in the EU. 

"We are expecting a market of about £240bn this year if the referendum vote is to stay in and there is no disruption that way. That is quite substantially higher than our original expectation of £220bn, the mortgage market is definitely flourishing.â€

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