Nobody knows for certain how leaving the EU will potentially impact the UK. The arguments go back and forth and round and round, with many people not knowing who to trust or what to believe.
George Osborne recently said that house prices would fall by 18% if the people of the UK opt to leave the EU at the referendum next month. Iain Duncan Smith essentially accused the Chancellor of lying. It all reflects rather badly on politicians, but more importantly it is almost impossible to say with any degree of certainty whether Osborne is right. Forecasts are being used as facts.
Perhaps a better insight into the future can be gleaned from investors and people actively involved in both the property and student property market. A recent KPMG survey of global real estate investors found that two thirds of them believed a Brexit would result in less inward investment into UK property markets. Part of the reason for this is the uncertainty that a Brexit would bring to both UK and European markets pop over here.
The UK leaving the EU could be a long, drawn out process. This uncertainty could hit property markets hard, as investment generally slows down during times of political uncertainty. Student property markets have held up well in times of recession, but in times of political confusion they are likely to operate as any other market would, with investors playing it safe and investments slowing down.
The nearest comparison to what is happening currently is what happened recently in Scotland in the build up to the Scottish Independence referendum. Investment slowed and investors delayed making important decisions until the future was decided. The luxury end of the market in particularly slowed down, as did larger developments which would include student accommodation. Volumes of Scottish property sales were down 8 per cent the month before the referendum.
If that pattern is repeating now, it would suggest there is already a slowdown in investment and sales as a result of the upcoming EU referendum. Some analysts suggest that is the case, particularly in central London.
So despite what some politicians say, there are concerns and jitters amongst the people who strike multi-million pound property deals – Brexit could hit investment in the UK student property market and that is something that policymakers must be aware of both before and after the historic vote on the 23rd of June.