It would appear the housing market is holding its breath ahead of next week’s EU referendum. A new property report by two of the country’s biggest estate agents shows house values dipped 0.4 per cent in May. That may not sound like a lot, but it’s the steepest fall since 2011.
Year-on-year growth in house prices has also slowed, decelerating to 6.8 per cent in May, from 7.7 per cent in April.
It may well be that uncertainty is already having an impact. Chancellor George Osborne has predicted that a Brexit from the EU would lead to a reduction in property values by between 10 and 18 per cent.
Buyers may, therefore, be holding off until after the vote, with the logic that if Britain does leave Europe, property prices will dip. However, the converse may be true. While the uncertainty is leading to a reduction in prices at the moment, if Britain stays, confidence in the housing market could return, with an upwards impact on property costs.
Some developers are trying to counter this with "Brexit clause” deals. Galliard Homes, for example, is allowing housebuyers to pull out of a deal and get their money back if Britain votes to leave.
While no one has a crystal ball, the EU referendum effect is so far similar to that seen before the General Election when many buyers and sellers decided to keep their powder dry and await developments.
The lead up to the Scottish independence referendum in 2014 also meant a tumultuous time for the property market, with a 10 per cent drop in property transactions.
The Royal Institute of Chartered Surveyors says its members are already seeing a dip in activity across Britain. In its latest monthly report, it found the biggest fall in the number of people trying to buy a property since the financial crisis.
Whatever happens next week, analysts agree there will be an impact on property prices. What they can’t agree on is what that impact will be.
If we vote leave, and there is a sharp fall in sterling, it may be that international property buyers flood into the UK to snap up a bargain, particularly in London. That could, therefore, mean more demand, pushing prices back up.
If we stay, certainty will return to the market, leading to stability for property costs. Sellers are likely to feel confident enough to put their home on the market while buyers will no longer be waiting for price changes before taking the plunge.
While any effect will always be felt more heavily in London, the ripples could reach other regions.
However, the ultimate impact on the property market comes from the wider economy, job security and family income. Only if those factors are changed, either for better or worse, by a divorce from Europe will we see significant changes in the cost of North East homes.