EU referendum is biggest uncertainty for UK property market – Savills

A referendum on whether Britain remains part of the European Union is the biggest uncertainty facing the buoyant British property market next year, property group Savills said on Wednesday.

UK Housing MarketPrime Minister David Cameron is renegotiating Britain’s membership of the 28-member bloc ahead of a public vote due by the end of 2017, but Savills said that levels of investment could slow in residential, commercial and agricultural property especially if polls show a close result.

Head of Commercial Research Mat Oakley told Reuters that the uncertainty in the run-up to the referendum, with a date yet to be fixed, could see demand wane.

“The biggest risk to the commercial markets is that pre-vote period. Is it going to be three months, six months, nine months of speculation and the market may just go slightly quieter,” he said.

“We have spoken to a number of people who’ve said we’ll seriously consider moving our headquarters functions … and our growth over the medium term to long term may well be more skewed to the EU … if the UK were to leave.”

Opinion polls in recent weeks have shown conflicting results, with several suggesting that up to 20 percent of voters remain undecided.

Savills, which forecasts the average house price of prime property in the capital will fall 2 percent this year, said central London, where foreign investors tend to buy homes and many international firms are based, could be most hit due to the uncertainty ahead of the vote.

“I think that contributes to a slow prime central London market where obviously you have the biggest level of international demand,” Head of Residential Research Lucian Cook told Reuters.

London-focused housebuilder Berkeley said last week that the capital would see its status as a world city diminished were it to leave the EU, and would need fewer new homes built as a result.

After double-digit or near double-digit house price growth last year in Britain, spurred on by a scheme designed to help younger and first-time buyers get on the property ladder, the pace of price rises has already slowed this year.

Savills said that average British house prices would rise 5 percent in 2016 and that by 2020, prices would have risen faster in central and southern England than in London as some buyers looked elsewhere for opportunities.


Source: Reuters

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