You have to have been hiding under a rock if you didn’t hear Osborne's comments on the impact of Brexit on the housing market. People coming into our office during this (admittedly quiet) week are all concerned over the reported 18% drop now this country has voted out of the EU.

 

Pre election it was all over the press, telegraph, financial times and any other websites a google search might drag up. So with all this reporting and a broken sales chain specifically citing a predicted 18% drop in house values today I thought I’d take a look at the actual forecasts rather than relying on news reporting and political spin.

 

The HMT Brexit document says the figures quoted are the peak impact over the two years. With the much publicised 18% being a ‘severe shock scenario’.

 

 

Sadly there doesn’t appear to be a chart or any comment on the movement over those two years and they do not say when this peak impact might be expected to occur. So, after 1 year then it is possible the analysis shows a recovery in the second year. They just don’t give us that information unfortunately.

 

The Office of Budget Responsibility also published a report in March of this year. Such reports are produced for each Budget as it is part of their economic forecast on which all the tax and spending plans are hung. The -10% or -18% is a reduction of the forecasted increase in house prices and not an absolute fall.

 

 

The range of ways in which this sort of thing gets reported in the press is not helpful, nor is the lack of necessary corrections from those who know such as HMT and Osborne. A cynic might suggest the data was presented in such a way to generate these headlines.

 

What we ultimately end up with is a self fulfilling prophecy with misinformed headlines fuel greater uncertainty, driving down prices further. Then again “18%  reduction of the forecasted increase in house prices expected over the next two years within a sever shock scenario” doesn’t quite have the same ring to it, sell the same amount of papers, or, indeed influence voting.