Ultimately, the impact of the EU referendum is dependent on what the outcome means for the UK economy, given that housing policy is essentially a domestic issue and mortgage regulation sits with the Bank of England.

However we do believe that the UK housing market may be affected by associated economic uncertainty; both from the vote itself and, in the event of a vote to leave the EU, the two-year window for the Government to negotiate the terms of an exit.

Pre-referendum

By affecting consumer confidence and people’s willingness to commit to a house move, the referendum is expected to temper transaction levels and the general strength of demand.

Similar concerns were expressed prior to the UK general election in 2015. However, if we look at monthly transaction levels across the UK mainstream market, it is difficult to pinpoint a fall in general market activity prior to the general election, given that seasonally adjusted transaction levels were already on a downward path at this time, though the extent of the bounceback immediately post election suggests that sales were indeed suppressed in the pre election period.

With the outcome of the EU referendum far from certain, we could see a similar impact in 2016, although it is highly unlikely that it would cause the UK housing market as a whole to freeze. In the prime London markets, pre-election uncertainty had a much greater impact. In 2015 this was heightened because of policies that specifically affected the top end of the market, including a possible mansion tax and stamp duty changes introduced by the coalition in the 2014 Autumn Statement.

By contrast, in the first quarter of 2016 any uncertainty regarding the EU referendum has been offset by demand from those looking to beat the 1 April deadline relating to the 3% stamp duty surcharge on additional homes. Accordingly, we expect the impact to be more keenly felt in the second quarter of this year, particularly given the added political uncertainty from a London mayoral election in May.

Thereafter much will depend on the outcome of the vote.

Post-referendum

A vote to stay is likely to see restored demand, although we believe that any ‘relief rush’ is likely to be tempered by mortgage regulation in the mainstream market and taxation constraints among investors and in the prime London market.

Assuming a vote to leave Europe, a more prolonged period of uncertainty in the UK economy as an exit is negotiated has the potential to affect housing market demand, though the impact on values might be mitigated by a more prolonged period of ultra low interest rates.

Similarly we would expect overseas buyers in the prime markets of central London to be more cautious, despite the prospect of a weaker sterling that has previously been a catalyst for this source of demand. We also believe this sub-market is more exposed to the short-term risks to the financial services sector, which would make it more difficult to sustain a return to trend rates of house price growth.

However, whatever the outcome, there will continue to be a market once the uncertainty clears, albeit potentially more focused on needs-based moves. The drivers of death, debt and divorce, together with the needs of upsizers and downsizers, will continue to drive turnover.