Update: Britain has voted to leave the European Union.

The prospect of Britain leaving the European Union unnerved global markets in the lead up to the vote. The British pound, and risk currencies such as the Australian dollar, were weaker when polling suggested a 'leave' vote would win.

But in more recent days, when polls and betting markets leaned towards a 'remain' win, the pound rebounded, and the Australian dollar strengthened along with it.

As far as the Australian property market goes, if the 'leave' vote wins there could follow a period of extended global uncertainty. The pound would weaken, and British investment could slow. There have been dire forecasts that Britain will slip into a recession, with some even suggesting a global recession could follow a 'leave' win. 

Richard Wakeline of Wakelin Property Advisory wrote in The Australian Financial Review, "Should the 'leave' campaign win, it will be a terrible shock to the British, European and international establishments. They really aren't prepared for this eventuality, and the resulting confusion and uncertainty could kill confidence and push Britain into recession."

An extended period of global uncertainty would dampen confidence across all market, including the Australian property market. If a 'leave' vote triggers a period of global economic turmoil, bank borrowing costs could rise, increasing the cost of housing loans, even if the cash rate remains low.

It will take many years for Britain to unravel itself from the Union, so the medium to long-term implication are uncertain. There may also be implications for Europe if other nations begin separatist movements. Without Britain, Europe will be a smaller, less powerful economic force.

A 'stay' vote would reassure global markets, having removed an element of global uncertainty. But other uncertainties remain: there is our own federal election, and of course the prospect of a Donald Trump presidency in the US. These uncertainties, depending on their outcomes, could further constrain confidence, which could flow through to weakness in the local property market.

Wakeline writes that continued uncertainty would keep rates lower for longer, but any boost from low rates to the housing sector will be tempered by weaker economic growth. He writes, "On face value, that (lower interest rates) helps highly geared investments such as residential property. But, careful what you wish for. The benefits won't be there if the global economy is decimated."

See also:

London Property Prices To Crash 25% While Politicians Flee the UK   (New)

Opportunity disguised as disaster

The Great Brexit Lie

The Brexit Conundrum