Chancellor of the Exchequer George Osborne has attracted ridicule and amazement in equal measures amid suggestions that UK house prices could be “worth up to 18% less” by 2018 if the UK votes to leave the European Union. This measurement is against what Treasury analysts forecast for UK house prices if the UK remains within the European Union although there is little in the way of real evidence to support this.
The term “worth up to 18% less” is also a little ambiguous, could house prices be worth 1% less, 10% less, or could they actually be worth more? Even this statement is a little flaky when you begin to dig beneath the surface.
Is this advice misleading?
Those who are following the UK EU referendum will be well aware that house prices have been used by the Remain side as a means of attracting support. While we need to take any advice from either side with a pinch of salt, as nobody actually knows what will happen, the scare tactics from the likes of George Osborne seem to be getting ever more desperate. When you bear in mind that your home is probably the largest investment you will ever make, any risk to the value of your property would certainly pull at your heartstrings. Will these scare tactics be enough to change the minds of sceptic voters?
Backed by the Treasury
It was revealed that the UK Treasury, part of the UK government, will next week publish an analysis suggesting that two years after a Brexit vote UK house prices could be between 10% and 18% lower than after a remain vote. Again, as we mentioned above, there is no definitive guidance even in the phrase used “could be between 10% and 18% lower” which makes you wonder why the Treasury would even consider publishing this analysis?
Many are also now starting to question the role of the UK Treasury because the UK government in the shape of David Cameron is extremely supportive of the European Union. Is the Brexit campaign receiving as much taxpayer funded assistance as the Remain campaign?
Could these scare tactics backfire?
These scare tactics used by the likes of George Osborne in relation to UK house prices could backfire in two ways. We have already started to see investors moving to the sidelines and with limited demand for UK property at the moment there is a softening of prices. This is something which was fully expected and something we saw in the run-up to the Scottish independence referendum. We could also see the scare tactics used by European Union supporters backfire as claims become ever more desperate and lacking in real statistical support.
It is a little surprising to see such desperate tactics by those supporting the European Union when you bear in mind that UK bookmakers have significantly shortened the odds on the UK remaining in the EU. However, do not write off the Brexit campaign just yet because there will likely be more twists and turns in this extremely important referendum campaign.