FILE - This is a Thursday, April 14, 2016 file photo of Britain's Chancellor of the Exchequer George Osborne while speaking at a news conference during the the G5 Ministers of Finance meeting during the World Bank/IMF Spring Meetings in Washington. Britain's Treasury says house prices could fall by up to 18 percent if the country leaves the European Union — a claim dismissed as scaremongering by campaigners for a U.K. exit from the bloc. ( AP Photo/Jose Luis Magana, File)
Republished May 21, 2016 - 3:52 AM
Original Publication Date May 21, 2016 - 2:40 AM
LONDON - British house prices could fall by up to 18 per cent if the country leaves the European Union, the Treasury says — a claim dismissed as scaremongering by campaigners for a U.K. exit from the bloc.
Treasury chief George Osborne said leaving the EU would be a "profound economic shock" that would lower property values and raise mortgage rates.
Treasury analysis estimates property prices will be worth between 10 and 18 per cent less by 2018 if Britain leaves than if it stays.
British house prices rose 9 per cent in the year to March, and the value of property is something of a national obsession — especially in London, where the average home costs 535,000 pounds ($775,000), more than 10 times the average annual household income.
Some economists think a fall in house prices would be a good thing because it would help new buyers currently priced out of the market. Others argue any benefit would be offset by a rise in mortgage rates and economic instability.
Many international banks and ratings agencies have warned that leaving the EU would destabilize the economy, and Bank of England Governor Mark Carney said earlier this month that a British exit, or Brexit, could tip the country into recession.
Osborne, who was attending a meeting of G-7 finance minister in Japan Saturday, said allies including France, Germany and the United States agreed that "it would be bad for the British economy if we left the European Union."
But Energy minister Andrea Leadsom, who backs a "leave" vote in Britain's June 23 referendum, said Saturday that "the greatest threat to the economy is the perilous state of the euro" currency used by 19 EU states.
"The safer option in this referendum is to take back control of the vast sums we send to Brussels every day and Vote Leave on 23 June," she said.
News from © The Associated Press, 2016