Brexit 'would cause house prices to plummet by up to 18%', Treasury report warns
ITV News report by Political Correspondent Paul Brand
House prices would plunge by up to 18 per cent if Britain votes to leave the EU, a Treasury analysis has found, while mortgage interest rates would shoot up.
The report, due for publication next week, examines the short-term impact of a 'leave' vote and has sparked Tory in-fighting.
Chancellor George Osborne said the report would forecast that homes would lose between 10 and 18 per cent of their value within two years if the Brexit vote wins in the June 23 referendum, compared to what they would be worth if the UK remains part of the union.
The average UK home costs £292,000 - meaning the value of typical homes would drop by between £32,000 and £57,000 by mid-2018.
Mr Osborne, speaking during a meeting of G7 finance ministers in Sendai, Japan, said mortgages would become more expensive in the case of a Brexit, making it more difficult for first-time buyers to get on the ladder.
He added:
However, former cabinet minister Iain Duncan Smith said the Treasury had failed to spot the recession and its forecasts were often wrong.
The former Work and Pensions Secreatry told Sky News: "When I heard that I did think of Pinocchio and the nose growing rather long here.
"Let me just remind everybody that it was the Treasury and George Osborne who said when we came into power in 2010 we couldn't trust Treasury reports because they were always fiddled with by Chancellors of the Exchequer.
"So, we gave that over to the OBR that is independent because we couldn't trust Treasury reports.
"Now what we have had is a whole series of Treasury reports telling us the world is going to end, we are going to end up with lower house prices, the economy is going to be bad."
Former Business Secretary Sir Vince Cable, who was campaigning alongside Mr Osborne for the Remain campaign earlier on in the week, has blasted his claims on house prices.
Sir Vince tweeted:
Energy minister and Leave campaigner Andrea Leadsom said the 18% figure made in the report is "an extraordinary claim and I'm amazed that Treasury civil servants would be prepared to make it."
Mr Osborne's warning follows analysis from the Centre for Economics and Business Research (CEBR), which found that a vote to leave the EU would mean the average UK house price would drop by just over £2,000 by 2018.Prices in London would drop by £7,500, its report added.