EU Referendum - How Will It Affect You?
Repolist's Director and Founder, Anthony Ayton, shares his views on the EU Referendum and explains what leaving might mean for property investors and developers. With the EU Referendum countdo...
Repolist's Director and Founder, Anthony Ayton, shares his views on the EU Referendum and explains what leaving might mean for property investors and developers.
With the EU Referendum countdown well and truly on and Polling Day set for Thursday 23rd June, you may well have had enough of listening to politicians trying to convince you to vote to stay in or leave the EU.
It feels as if no-one can say with any certainty what will actually happen to the UK’s economy and how our tiny island with a population of nearly 65 million people will be affected by a move in or out of the EU. From a property perspective, it’s important to arm yourself with a few key facts when it comes to the EU Referendum.
As the world’s most negative property analyst, I've been confidently predicting a property correction since the year 2000. Two big events that may ordinarily have resulted in a fall in property prices were nullified by cuts in interest rates – the tech bubble and the financial crisis. In the event of another financial shock that may result from the UK leaving the EU, this option won’t be available.
Should we leave the EU, it’s highly likely that Sterling will fall. The goods that Britain imports (and it’s wise to remember that we have a massive deficit) will feed inflation. This means The Bank of England will be under pressure to increase interest rates in order to control increasing inflation. The government has a budget deficit. It borrows money in order to run the country. If the currency starts to fall, Bond markets will demand higher interest rates.
It’s this rise in interest rates that will ultimately puncture the UK property bubble. A return to bank base rates of 5% or more (low historically) would be unsustainable for huge numbers of property owners and investors. Foreign money invested in London would also evaporate if the prevailing view was that the London market was falling. Ultimately, if we lose investment in the London property markets this will have an adverse effect on the rest of the UK.
All things considered, I’ll be voting to stay. But don’t take my word for it, I have been wrong for the past 16 years!