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The European Union continues to struggle with refugees, unemployment and housing as more nations express their dissatisfaction with Belgium. The British vote for exiting the EU – the so-called Brexit – might lead to a quick economic downturn in the short-term. Many financial leaders are warning of the economic implications of the United Kingdom leaving the EU. How might leaving the EU affect the UK housing market?

UK is only partially in the EU

British policy makers have done an effective job in straddling the fence with respect to the Continental European Union. UK voters can depend on their local legislators in London to make important decisions affecting their lives. On top of this, many believe that the UK-EU relationship is too complex to be sorted by an in/out referendum.

The City of London is a global banking center with an independent monetary policy, control of the British pound and establishment of LIBOR. Already, many international investors see the UK housing market as more of an “Anglo” system (aligned with the United States).

Political Uncertainty

Many commentators worry that a Brexit could lead to serious political uncertainty. “Credit Suisse fixed-income research analysts Sonali Punhani and Neville Hill predict [that a] UK vote to leave the EU would trigger a snap recession, prompt a fall in share prices and house prices and knock as much as 2% off GDP” due to a “depressed business confidence” and “sudden stop of capital flowing into the UK” in the medium term.

Economic Arrangements

“A KPMG survey found that 66 per cent of real estate experts believed that ‘Britain leaving the EU would have a negative impact on inbound cross-border investment’ ” EU government officials would be forced to sell their land. According to a 2013 Knight Frank study, “49 per cent of all prime central London buyers were non-British citizens … but only 16.5 per cent of buyers were from other EU countries.”

How could Brexit be beneficial?

Brexit would re-establish autonomy allowing the British to concentrate on their own housing market issues, instead of trying to fix the depressed land sectors of Ireland and Spain. The government would not throw good money after bad into a failing EU cesspool.

The UK is Still Part of Europe

So, while many experts predict a short- and mid-term economic shock, in the long-term, the UK could benefit. The UK may become a safe haven for wealthy EU emigres. Encouraging EU migrants to come to the UK, especially if they are wealthy could be beneficial to the UK. This would result in more money being brought into the British economy through outside investment.

Of course, the future is difficult to predict. If you are considering purchasing property today, ensure that you are in full possession of the facts about the UK housing market. Read up on some of the property coverage about. As well as this, take full advantage of some of the many online resources to ensure you find the best deal, regardless of whether or not the UK remains a part of the EU.

Andy McGowan
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