Strong trading results to May from house builder Bovis confirm positive market conditions backed by plentiful mortgage finance, adding that the incoming referendum has not had a ‘discernible impact’ on its business.
The trading update said: “A number of sites have sold out earlier than expected and, as a result our total number of sales outlets has remained broadly constant over the year to date. The forthcoming EU Referendum has had no discernible impact on our business with strong demand across all our operating areas.”
This follows Chancellor George Osborne’s TV statement last weekend that leaving the European Union would hit house prices significantly and make mortgages more expensive.
Treasury research is due out about the short-term costs of Brexit, but one key finding already revealed is that house prices could fall if we vote to leave on 23 June.
In the first episode of ITV’s Peston on Sunday, the Chancellor said: “You will see the analysis we 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.”
However, residential investment advisers London Central Portfolio (LCP) said in the event of an exit from the EU, London house prices, for example, are unlikely to be affected.
Just 12% of buyers in the Capital are from Europe and the majority of buyers are attracted by London’s cultural, educational and financial centre, alongside its rule of law, political and economic stability, all of which would also be unaffected by a Brexit.
Equally, uncertainty has driven sterling to new lows this year giving some investors a further advantage.
Naomi Heaton, CEO of LCP, said: “USD denominated investors, such as those in the Middle East, for example, have been enjoying discounts of almost a fifth, cancelling out the cost of the new 3% additional Stamp Duty.”
She added that investment bank Nomura predicted a further 15% fall in the pound on Brexit, making UK property even more attractive to global investors.
Last month, Osborne said consumers will be left poorer while facing a hike in their mortgage costs should the UK vote to leave the European Union. At IMF meetings, Osborne reportedly claimed that a sharp fall in the value of sterling and tightening of credit conditions would raise Bank base rate-linked mortgage payments.