House prices in the UK are expected to rise further regardless of whether Britain opts to remain or leave the European Union.
Despite growing uncertainty ahead of the looming EU vote which the Royal Institution of Chartered Surveyors (RICS) forecast will result in a short break in price growth over the coming months, house prices are still expected to end the year higher.
Residential property prices are set to increase faster than UK inflation and outstrip average pay gains, making the homeownership dream even harder for the average first-time buyer, a Reuters poll found.
But the research does show that the decision to remain a part of the EU or exit the 28-member bloc will impact on the level of capital growth.
If Britain stays in, house prices are expected to rise by 5% this year, the poll of 17 experts taken in the past few weeks found, far outstripping the 0.7% inflation forecast by economists in a separate recent Reuters poll.
Next year and the year after, prices are forecast to increase about 4%, compared with corresponding inflation forecasts of 1.7% and 2%.
In the event Britain votes to leave the EU, prices will almost certainly still rise, albeit at a slower rate of 3.8% this year, but stay flat in 2017 before picking up 2% in 2018, the Reuters poll found.
The poll of experts pours scorn on the Chancellor George Osborne’s claim that a vote to leave the EU would have a ‘major hit’ on residential property prices across the UK.
The chancellor recently said that a UK exit from the European Union could cause house prices to nosedive.
Property prices have been at the forefront of the EU debate in recent weeks, with the Chancellor claiming that the value of homes in the UK could fall by as much as 18% following a Brexit vote.
Based on the average price of a home in the UK, Osborne’s forecast suggests that the average residential property could fall in value by more than £50,000 within two years of the vote in comparison with what it would be if the UK stayed in the EU.
Some may say that Osborne’s predictions are rather bold, given that there is a severe housing shortage in this country.