Chancellor George Osborne has warned that a Brexit vote could send house prices plummeting by up to 18%.
Speaking at a meeting of the G7 finance ministers in Japan, Osborne also said that mortgage costs could rise as a result of leaving the EU, making it more difficult for first-time buyers.
Osborne said: “If we leave the European Union, there will be an immediate economic shock that will hit financial markets. People will not know what the future looks like.”
He told the BBC: “And in the long term, the country and the people in the country are going to be poorer.
“That affects the value of people’s homes and the Treasury analysis shows that there would be a hit to the value of people’s homes by at least 10% and up to 18%.”
With the average cost of a house in the UK now £292,000, this means prices could fall between £32,000 and £57,000.
An analysis by the Treasury detailing the impact of a Brexit vote shows that leaving the EU could trigger a year long recession and cause economic growth to fall by 3.6%.
“And at the same time first-time buyers are hit because mortgage rates go up, and mortgages become more difficult to get. So it’s a lose-lose situation,” said Osborne.
“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. And of course if we left the EU, mortgage rates would go up, it would become more difficult to get mortgages so they’d be hit as well.”
Earlier this month, the International Monetary Fund said a vote to leave the EU could send house prices crashing and severely damage the UK economy.
According to a joint study by the Cebr for the National Association of Estate Agents and the Association of Residential Letting Agents, exiting the European Union could wipe a staggering £26.5 billion off total property values.
The research also found imposing greater restrictions on foreign workers coming into the UK as a result of a Brexit vote could hit the UK’s ability to build homes.
However, the Remain camp has been accused of scaremongering. Many industry experts have said that leaving the EU is unlikely to affect mortgages or house prices.
A recent report from the Royal Institute of Chartered Surveyors found that while prime property prices in London will likely fall if the UK decides to break away, house prices in the rest of the country are likely to weather the market turmoil following a Brexit vote.
Responding to the Treasury’s report on the short-term impacts of leaving the EU, Conservative MP Iain Duncan Smith said: “As George Osborne has himself admitted, the reason he created the independent forecaster, the OBR, was because by 2010 the public simply did not believe the Government’s own economic forecasts. The Treasury has consistently got its predictions wrong in the past. This Treasury document is not an honest assessment but a deeply biased view of the future and it should not be believed by anyone.
“It is a fact that we hand over £350 million a week to the EU. If we Vote Leave we can take back control of that money and use it to help people here in Britain. We will also take back control over our economy creating hundreds of thousands of new jobs as we do trade deals with growing countries in the rest of the world.”
