Our views

Housing market weakened by EU referendum uncertainty


Trevor Greetham, Head of Multi Asset

10 June 2016

The RICS housing market survey for May showed a sharp deterioration. The New Buyer Enquiries balance is at its lowest ebb since the financial crisis, suggesting that nationwide house prices could drop by 5% over the coming year. Increases in stamp duty and a tougher tax treatment of buy-to-let investment have certainly had a large impact, visible in the surge in housing transactions ahead of the new rules.

However, we suspect the EU referendum is also having a large negative impact on sentiment here and elsewhere, as economic uncertainty deters would be buyers. If the outcome of the vote is Remain, as we expect, then business and housing market confidence should recover into the year end, raising the prospect of the Bank of England following the US Federal Reserve in hiking rates.

The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. The views expressed are the author’s own and do not constitute investment advice.