Expert says a Brexit from Europe would not knock London house prices

Just in case you don’t know, Brexit is an abbreviation of “British exit” a trendy catch phrase for the possibility of Britain’s withdrawal from the European Union.

Predictions are rife at the moment over the effects of pulling out of the EU. Whether you consider it a good or bad thing, it is bound to send ripples through many sectors of industry, production in general and house prices.

Last December, Berkeley Homes feared it would mean London in particular having less jobs and lower growth and thus requiring fewer homes to be built. In general a larger proportion of the property Industry did consider that it would have a negative effect and that we need to be in Europe to influence i and increase our trade options. But is it the case that house prices especially in London would be compromised, with a decline in foreign investment in the city?

There are strong counter arguments for suggesting that it will not have a negative effect at all and hardly change anything. Are the fears of estate agents and developers just false panic?

Prime City property has always been attractive to international investors, 49% of it was shown to be owned by people from other countries, by a survey in 2013. But the EU had little to do with this effect, as only some 16.5% of buyers came from the European community.

There is a possibility that key staff and some European banks will re-locate. However the same possibility was on the cards when Britain decided to stay out of the euro and on that occasion nothing much changed.

EU workers in Britain are generally doing valuable jobs; it is very unlikely that they would lose their automatic right to work, as they are contributing to the economy. Therefore those earning good salaries should not find it any harder to buy London properties. Those on lower salaries would not be seeking to buy in the capital anyway, no matter the situation.

The prime London market for rich investors from places like Russia or the Middle East who together make up14.5% of up-market property purchases in London, are not going to be swayed by Brexit. What attracts them are political and economic stability.

The issue is not leaving Brexit, but what Britain does with its new found freedom and how the Government responds to the situation, especially as regards European rules on property ownership and cross-border investment. Would a UK Government implement laws to limit foreign purchasing of property in London, or require so many days a year residency? The feeling is that they would actually be keener to attract foreign investment.

The main case for leaving seems to hinge on what is seen as heavy handed regulations that are issued from Europe, but detrimental to our own policies. However, there may well have to be just as many new rules to cope with the dramatic change, if it occurs. The results on house prices in London cannot be certain, but looking at past experience, the factors that control prices do not really rely on us being in or out of Europe. It is more a case of supply and demand and who has the money to afford investment.