House prices would take a hit of as much as 18% if Britain leaves the EU, while mortgage interest rates would go up, according to new Treasury analysis.
Chancellor George Osborne said that a Treasury document on the short-term impact of Brexit, due for publication next week, will forecast people’s homes will lose between 10% and 18% of their value by 2018 if Britain votes Leave in the June 23 referendum, compared to what they would be worth if the UK remains a member of the EU.
With the average UK home costing £292,000 and the Office for Budget Responsibility predicting rises of 9.4% over the next two years, this would be the equivalent of depressing the value of a typical residential property by £32,000-£57,500 by the middle of 2018 - with much higher losses for more expensive homes.
If borne out in reality, the forecast would not only wipe out the expected increase in property values, but leave homes worth between 0.6% and 8.6% less in cash terms than they are now.
Speaking during a meeting of G7 finance ministers in Sendai, Japan, the Chancellor said Brexit would make mortgages more expensive and make it more difficult for first-time buyers to obtain a home loan.
“If we leave the European Union there will be an that will hit financial markets,” Mr Osborne told the BBC.
“People will not know what the future looks like. And in the long term the country and the people in the country are going to be poorer.
“We all want affordable homes, and the way you get affordable homes is by building more houses. You don’t get affordable homes by wrecking the British economy.”