Zoopla has forecast that house prices will fall 20% if there is a vote to leave in Thursday’s EU referendum.
Its prediction appeared in yesterday’s Mail on Sunday, which has been waging a fierce stay campaign – unlike its sister paper, the Daily Mail, which is pro-Brexit.
According to yesterday’s forecasts, Zoopla says that a Brexit would wipe out nearly all of the house price gains made over the last five years and leave some home owners in negative equity.
Zoopla says the average house price of just over £297,000 would fall by over £53,000 due to the combined effect of uncertainty, increased unemployment, reduced investment and higher borrowing costs.
Altogether, an out vote would cut £1.5trillion off the total value of the UK’s housing stock.
In London, Zoopla puts average home prices at £671,989. It said this would fall to £550,989, while across the south east there would be a drop from £396,682 to £325,282.
Even in the area with lowest house prices – Yorkshire and Humber – the average would fall from £167,023 to £137,023.
Zoopla says its number-crunching, which is based on Treasury projections, implies that ‘most of the gains clawed back since the credit crisis would be wiped out… leaving home owners with less equity and some in negative equity territory’.
The Mail on Sunday does not say where Zoopla got its average house price of just over £297,000 from. The price seems closest to the latest LSL/Acadata price of £293,599.
However – although it seems to have gone largely unnoticed – last week’s new official house price survey has already sliced the best part of £100,000 off average house prices.
The ONS said average house prices in March were £292,000.
Last week, the new index, produced by the ONS and Land Registry, said that in April, average house prices were £209,000 – a huge plunge.
Analysts might have been equally surprised to note that this figure was an enormous monthly jump from the Land Registry’s average price of £189.901 for March.
Yesterday’s story in the Mail on Sunday featuring Zoopla’s forecasts quickly received hundreds of comments.
But many made it clear that far from dreading a fall in house prices, the public would welcome house price cuts.
One said: “Great. It’s about time prices went down.”
Another said: “Excellent – house prices are beyond stupid and getting worse. If leaving the EU gets them back to a more sensible level than that is another reason for voting to leave.”
Another comment was: “Just another scare story from the Remain camp. Get tired of all this cr*p now.”
Comments (24)
International apologises.
An true gaff in my last post. In the second paragraph, I should have said in support of the ‘remain campaigne’ and not the “leave campaign” !!!
Interesting.
Although it would not surprise me to hear that the figures quoted came from the Treasury, any downward trend in the ‘average price’ will surely be influenced by the lack of sales at the top-end, thus affecting the calculation of ‘average’
However at the risk of being controversial with those who did not like my remark following the CEO of Zoopla being awarded an honour last week, could it be that he is already doing the Treasury’s bidding in support of the ‘Leave’ campaign ?
No doubt if we are successful in achieving a Brexit, any price falls will be blamed accordingly, whereas in reality any fall is more likely to be as a result of recent government policy for the sector, together with the general state of economies, both in the UK and the rest of the world !
Complete scaremongering nonsense!! I wholeheartedly agree with AgencyInsider that the political spinning and attempts to discredit anyone with an opposing view have been a disgrace. When will the penny finally drop with the political advisers? We are intelligent enough to see through it all. All the mud slinging and rhetoric has has only served to dumb down the argument. Is it any wonder the normal person in the street has become completely disenfranchised with Politics? My views are my own and I don’t see the need to express them on here. I do however listen, except and respect others that have different views though…. Now there’s an idea on how politicians should conduct themselves!
I wonder if Zoopla came to this figure with help from their valuation tool, if so what could go wrong!
Is that ‘the’ Paul H?
The sheer silliness of a 20% price drop made it too tempting to pop in and say hi!
Nice to have you back – even if it is just a ‘special guest star’ performance.
Just goes to prove you can take a man out of the game but you can’t take the game out of the man! ;o)
Oh Dear, trouble is Zoopla are using Treasury figures which have been consistently discredited for years. After all, when has the government hit any of its targets over the last 5 years?
There might indeed be problems after brexit, or might just be business as usual. Using discredited figures damages Zoopla’s argument and standing in the property community
Re-hashed nonsense from George. Not that he ever tried to damage the property market !
Looks like David Scameron has got to Zoopla now! Anyway, why are we being told the price of all other goods will rise but house prices go down? surely everything would rise or go down or stay the same. The man is a colossal t**t.
ha-ha. Zooplas silly scaremongery story is about as accurate as the hapless property valuation tool. Zoopla has about as much credibility as druggie Bob Gedoff.
In other news today on EYE, RM stat average asking price is now at (a staggering) £310,000 – Lets be honest if that is true its crazy.
To own an average property in the UK you need to spend £310,000 – I for one would like to see a sharp correction in the market for both ethical and business reasons. Why should hard working familes have to pay out probably 3/4 of the family income just to put a roof over their heads and run it.
Also all these young couples seduced by artificially low interest rates fixed for a couple of years at circa 2.5% wait until they rise sharply to the more normal and expected 6.5% in the next few years. Their will be tears before bedtime!
There’s an inherent issue with averages. E.g. 9 properties at £10k and 1 at £1m means the average property price is £109k when in fact 90% of properties cost just £10k.
Knowing the median property price (the price at which half of all properties are cheaper/more expensive) would be useful, and I suspect it would be lower than the average price.
I think also when they quote the average price it should be per region. To us London is not just a different country …it’s a different planet. We still sell 3 bedroom terraced houses for between £100,000 AND £140,000. So undoubtedly the average price in the Midlands is totally different to that in greater London or the south east.
All very valid points.
But i am in an area where this is relevant. Not a particularly affluent area of UK (average wage / employment) but to get a modest 3 bed starter home you are looking just below the 300k price point.
I have couple mid twenties, saved and with the help of parents just bought their first home, 2.5 beds in okay area (semi) they paid 290k think it was about 30k they put down. They have a mortgage in-excess of quarter of a million pounds between them they make before tax circa 50k – Banks happy to lend to them, have a nice 2% mortgage rate for 2 years.
Is it ethical that a young couple just starting their lives together are lumbered with such massive debt just to have a home? – They are hard working and will be servicing this mortgage for years, as soon as rates rise they will find a massive difference in monthly payments.
I would like to see a correction in the market and a sustained period of time where house prices are nothing but level. Wages are not going up in proportion, we run the risk of of large companies becoming housing providers and going from a nation of home owners to renters. If you want to give me a dislike just look at how private landlords are already being priced / taxed out of the market.
Scaremongering nonsense of the kind we have come to expect from both sides of the debate.
I may have missed it but has anyone from the Leave lot ever said there would be anything positive about staying – and vice versa? It is inconceivable that the garden smells even more of roses if we stay or that the world comes to an end if we leave.
In my lifetime this has been the worst of political campaigns. The lies told by politicians on both side of the argument have been so obvious as to be laughable. Whatever the result, this referendum will go down in history as a farce and confirmation that there is not a single Statesman or Stateswoman left in British politics. They are all short-termist here-today, gone-tomorrow, lightweights. A pity.
They seem to have forgotten to mention the world would end as well!
And this would be a bad thing because?…………….
REAL house prices?
Or just their infamously woeful ‘Estimates’?
I was going to try to add to this debate but the first two comments sum up my views beautifully.
If the trend so far has been for young people to vote to remain in the EU, this story could encourage then to vote to leave so they can buy homes more cheaply. Possibly not what zoopla intended.
Prices seldom drop this much because sellers decided not too sell when prices drop by 10% causing a halt in supply until process recover.
Aren’t we seeing supply drying up already ? Around my neck of the woods we are all struggling to generate as many instructions as last year. There is a spicerhaart office here and the office was number 1 for market share last year is down to third or fourth (which pleases me ever so slightly) but even with our gains in market share we are still down on where we should be too!
If young people have so little brain as you suggest then this country is doomed whatever happens on Thursday.
The only number in that story that is reliable and accurate to any degree is the date.