Monday 13 June 2016 12:34 pm

Say what you like about the EU referendum - but Brexit isn't going to hit UK house prices

Why leaving or staying will have no impact on house prices

In the run-up to next Thursday’s referendum, there have been some flabbergasting claims made by both sides.

Suppositions made include the premise that leaving the European Union would lead to war and recession (although it was not made clear in what order these will occur). Apparently the fact the UK has been involved in multiple wars and recessions in the 40 years since joining the EU is lost on the Remain camp.

Read more: Only one in four estate agents think Brexit would hit house prices

On the other side of this ever-more acrimonious fence are the Leavers, who contend departing the EU will lead to more control over our borders (which seem to be porous to all comers anyhow, not just our European cousins), our legislation and particularly the size of our bananas. Or something like that.

Cameron is now bashing his friend Boris Johnson. Michael Gove is attacking George Osborne and Theresa May and Jeremy Corbyn is doing all he can to say little. Meanwhile, Nigel Farage is in his element.

The recent battleground being fought in the living rooms of households across the land, though, is that of house prices.

Osborne has passionately set out that leaving the European project will lead to a reduction in house prices of precisely 18 per cent.

The methodology behind the calculation is murky at best, but centres around sudden higher interest rates, raised mortgage costs, and therefore lower demand, causing a drop in pricing on homes. That’s a “fact”.

Back in February, we commissioned a survey of 1,000 homeowners to ask whether they thought property prices would rise or fall if the UK Brexited. Most thought values would drop and so we hypothesised that a lack of confidence and certainty might have a small adverse effect.

But the UK property market is quite some beast. Prices are up 2,000 per cent since we entered the European Union in 1973 and up eight per cent now on their previous all-time high of 2007, the period before the financial crisis.

And so, despite the worst global economic outlook since the 1930s, this downturn has proved to be a mere temporary carbuncle on the backside of the British home buyer. The aspirational property owner shrugged it off like a two-day cold and carried on buying, forcing up property prices, especially in London, by as much as 20 per cent in each of 2012, 2013 and 2014.

But what of interest rates? Well, we’ve had 0.5 per cent rates for seven years now and seem to have normalised this.

Yet in the heady days of the late 1980s, the mid-90s and early noughties when house prices were rocketing, rates were nine per cent; six per cent and four per cent respectively.

If history is anything to go by, the Bank of England, therefore, has a long way to go before it contributes to sending property values into reverse. I suspect the accompanying prospect of deflation in those circumstances would rather discourage them from such rises in any case.

Since the 1950s, successive governments have failed to oversee an adequate supply of house building versus demand. The shortage is about 100,000 homes each year. A cumulative deficit by any measure.

Read more: Where to buy? Here are 31 hotspots where house prices are set to soar

Even if immigration were ceased altogether, our population will still grow at a rate that will outstrip the current house building level, because more people are being born and the population is living longer. Some 25 per cent of UK households now are single-occupant.

Which all means there will continue to be more demand than supply. That will happen regardless of how the vote goes next week. Greater demand than supply equals higher prices. That’s definitely a fact.

So, do take note that leaving the EU may cure cancer. And staying will mean shorter queues at airports, and so on. But the value of your home? It’s safe as houses regardless.