British house prices would fall 10 per cent to 18 per cent if the country voted to leave the European Union, Chancellor George Osborne said.
The Treasury provided a transcript of an interview with the BBC in which Osborne warned that a Brexit would also unsettle financial markets, sending mortgage rates higher and hurting Britons trying to get onto the property ladder.
“If we leave the European Union there will be an immediate economic shock that will hit financial markets,” Osborne told the BBC in Japan at a G7 finance ministers’ meeting.
Osborne said the Treasury would publish an analysis on the short-term impact of Brexit next week.
“The Treasury analysis shows that there would be a hit to the value of people’s homes by at least 10 percent and up to 18 percent,” he said, adding “first-time buyers are hit because mortgage rates go up, and mortgages become more difficult to get. So it’s a lose-lose situation.”
The government has stepped up warnings against a Brexit as the June 23 referendum approaches. Several world leaders and international organizations have echoed the concern, including US President Barack Obama and the International Monetary Fund.
Osborne said Brexit backers were wrong to believe trade negotiations would be easy following a British departure from the EU, the world’s largest trading bloc.
After a Brexit, “we would have a two-year period to negotiate our exit with 27 other countries … at the same time conclude over 50 trade deals with countries that aren’t even in Europe. In other words that would be extremely difficult to do,” he said.
He said “businesses would have no certainty about what the future looked like, so they wouldn’t hire people, they wouldn’t invest.”
Conservative environment minister and “Vote Leave” campaigner Andrea Leadsom dismissed the warning on house prices.
“This is an extraordinary claim and I’m amazed that treasury civil servants would be prepared to make it,” Leadsom said in a statement.
“The truth is that the greatest threat to the economy is the perilous state of the euro; staying in the EU means locking ourselves to a currency zone. 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.
Britain’s economy slowed in the first three months of the year as uncertainty around the vote took a toll on growth.
The government warned in April that leaving the EU could cost each household 4,300 pounds a year by 2030.