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Brexit would see house prices fall significantly, says George Osborne

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House prices will fall significantly if Britain votes to leave the European Union, Chancellor George Osborne has said.

First-time buyers would simultaneously struggle because mortgage costs would rise, Mr Osborne claimed.

The Chancellor insisted voters need to think about the “short term hit” of Brexit and warned a forthcoming Treasury analysis would show a likely “significant shock to the housing market”.

Continuing the internal Tory war of words, he attacked leading Leave campaigner Michael Gove’s vision of Britain leaving the European single market if it leaves the EU as “catastrophic”.

After again highlighting Treasury claims that families will be £4,300 worse off if the UK pulls out of the union, Mr Osborne told ITV’s Peston On Sunday: “If we leave the single market actually our analysis says we’ll be worse off than that.

“And there’s a short term hit – I think it’s very important for people to think about that and we are going to be producing some more research on that in the coming weeks.

“It’s already clear from the Treasury analysis that for example, there would a significant shock to the housing market, that would hit the value of people’s homes, that would hit the cost of mortgages.

“We’re doing the work on it now but the emerging Treasury analysis backs up what you are hearing from major banks like Virgin Money that the value of people’s homes will be affected and people trying to get on the housing market would be hit because mortgage costs would go up.”

He added: “I’m pretty clear that there would be a significant hit to the value of people’s homes and to the cost of mortgages, that is one example of the kind of economic impact that we get from leaving the EU.”

But Mr Gove claimed the UK could enjoy a relationship with the EU that had “all the advantages” but “none of the payouts” by forging a new trading deal.

The Justice Secretary said the UK should leave the single market but would be able to agree to tariff-free trading with the remaining EU members.

Mr Gove warned that a vote to Remain would leave the UK at risk of losing even more control over its financial affairs as the EU members integrate more closely.

There was a “real danger” that “we could lose autonomy economically”, he said.

But “if we vote Leave then we are in a position to dictate the terms in Britain’s economic interests”.

Setting out his vision of the UK’s future trading relationship with the EU, Mr Gove said: “We should be outside the single market, we should have access to the single market but we should not be governed by the rules that the European Court of Justice imposes on us which cost business and restrict freedom.”

He added: “At the moment there are no tariffs between the UK and other countries in the European Union. Why should we seek to impose those tariffs when we are outside?”

Mr Gove said both sides could accept there was no need to erect tariffs where none existed.

“German car manufacturers are not going to want to have tariffs erected when they sell many more cars to us than we sell to them,” he said. “I cannot imagine a situation where, if any individual nation within the EU wanted to erect tariffs that others would let them.”

But Mr Osborne criticised Mr Gove’s remarks.

“We’ve just had the Leave campaign admit this morning that Britain would leave the single market, that’s the largest free trade area in the world,” the Chancellor said.

“That would be catastrophic for people’s jobs and their incomes and their livelihoods.

“Some people might think wrecking the economy is a price worth paying, I absolutely reject that.”

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