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Brexit has positives and negatives for UK home building
The decision to leave the European Union could adversely affect the construction of new homes as many workers are from other countries, it is suggested, but red tape will be reduced. It seems that overall Brexit has potentially mixed effects for the home building industry. One the one hand many workers are from other EU countries but builders would be free from red tape regarded as holding up construction. According to Brian Berry, chief executive of the Federation of Master Builders, the UK construction industry has been heavily reliant on migrant workers from Europe for decades. ‘It is now the Government’s responsibility to ensure that the free-flowing tap of migrant workers from Europe is not turned off. If ministers want to meet their house building and infrastructure objectives, they have to ensure the new system of immigration is responsive to the needs of industry,’ he said. He believes at the same time more must be put into training British people in the skills necessary for the construction industry and that should be done by investing in apprenticeship training. ‘We need to train more construction apprentices so we are not overly reliant on migrant workers from Europe or further afield. That’s why it’s so important the Government gets the funding framework right for apprenticeships,’ he explained. ‘When you consider that this whole policy area is currently in flux, and then you add Brexit into the mix, it’s no exaggeration to say that a few wrong moves by the government could result in the skills crisis becoming a skills catastrophe. It’s only through close collaboration between the government and industry that we’ll be able to overcome these challenges,’ he added. Jeremy Blackburn, head of policy at the Royal Institution of Chartered Surveyors (RICS) there are questions around the impact on access to a skilled workforce to meet the country’s construction and infrastructure needs. ‘We need reassurance that workforce migration will be addressed as a priority and it must not be allowed to impact on the attractiveness of the UK for investment, or as a place where major corporate and industrial occupiers want to do business,’ he said. However, John Elliott, managing director of Millwood Designer Homes, believes that Brexit could be good for the house building industry. ‘I am excited to get on with the New World and see the back of EU laws which have been detrimental to us for over 40 years,’ he said. ‘One of the UK’s biggest assets is our home grown housing market and this will now be much better off out of EU regulation. For many years, the EU Habitats Directive has had an unnecessary impact on house building,’ he explained. ‘The mere hint of great crested newts or slow worms on a site, which unlike in Northern Europe where they are rare and given special protection, are prolific in the South East of England can delay building for months as they have to be translocated… Continue reading
Prime property market in London set to be affected most by Brexit
The prime property market in London is likely to be the affected the most by the referendum results in the UK which will see the country leave the European Union. Sales activity and price growth in the prime London residential market have already both slowed since the middle of 2014 and in the run up to the historic vote many commentators and experts were predicting that a vote to leave would affect London the most. ‘There is no doubt that the vote in favour of Brexit will generate a period of renewed uncertainty in the prime London residential market. Some demand, especially from investors, will be delayed and in some cases redirected to other markets although the significance of these trends should not be overstated,’ said Liam Bailey of international real estate firm Knight Frank. He explained that demand for prime London property rests on a wide range of drivers most of which are unaffected by the referendum decision such as the scale of London’s business cluster, depth of skills, education, lifestyle and language. ‘It is not easy to identify an obvious alternative destination for investors despite short term nervousness. On the eve of the vote the pound sat 14% below its mid-2014 peak meaning pricing in the prime market was more attractive for dollar buyers. While a further weakening of the pound could increase inward investment, this impact will be constrained by the fact that around 80% of central London buyers are UK residents,’ he pointed out. ‘It seems a reasonable assumption to make that interest rates will be lower for longer, despite the risk of imported inflation from a weaker pound. While the long term benefit of ultra-low interest rates on the housing market may be questionable, in the short term they will act to underpin demand especially for equity rich buyers with access to the best funding rates,’ he added. Bailey also believes that the prime country house market will be similarly impacted by the result. ‘However while the market has performed relatively well over recent years, following a slow recovery immediately after the financial crisis, prices have not tracked London to date and there is scope for some outperformance in the short to medium term,’ he said. ‘While we are entering a period of renewed uncertainty in the UK and London market, ongoing issues around EU and especially Eurozone stability, which will be highlighted in the run up to French and German elections, are likely to counter this risk and shore-up London’s safe haven appeal,’ he concluded. The decision to leave has opened up a Pandora’s Box as far as the London property market is concerned and for overseas buyers, this big and dramatic drop in the value of Sterling will effectively offset the Stamp Duty and tax adjustments and it will make prime London property a lucrative investment for overseas investors bold enough to make a decision to buy despite the market uncertainty, according to Peter Wetherell, chief… Continue reading
UK property market set to see short term volatility due to EU vote result
The UK property market is facing short term volatility due to the decision by the people to vote to leave the European Union, but over the long term experts predict it will settle down and still be attractive. The main issues seem to revolve around how foreign buyers will react to the leave vote as there had already been signs of a wait and see attitude in terms of overseas investment in property in London in particular where demand and prices were showing signs of slowing. There will be international buyers who may initially give the London market a wide berth, according to Edward Heaton, managing director of property buying and search agent Heaton & Partners. But he pointed out that this could be short lived if the pound drops dramatically, as London will suddenly look much better value to foreign buyers. ‘There is a risk that with a period of uncertainty ahead of us, prices may drop off, but I believe that any fall will be limited and suggestions of a crash are overstated. The effect is most likely to be felt in London and the South East,’ he explained. However, Ian Westerling, managing director of Humberts, believes that continued uncertainty during lengthy negotiations as politicians thrash out what post-Europe looks like for Britain is likely to keep the brakes on the property market for the foreseeable future. He explained that people who have to move house will still do so but many investors and less committed buyers are likely to sit tight to see the economic and social impact of the referendum result. ‘Housing market professionals will need to brace themselves for a new norm in market dynamics, underpinned by the ongoing unknowns. The wait and see period could lead to some price adjustments. The onus will be on the Government to act swiftly to avoid the property market becoming paralysed which would have a knock-on impact on the rest of the economy,’ he said. Adam Challis, head of residential research at JLL, also believes that the London housing market will feel the effects of the decision more deeply. ‘The interconnected trading relationship between London and the rest of Europe means the implications are more complex. This will exacerbate the uncertainty for London’s home owners,’ he said. But he also pointed out that paradoxically, investors may well identify opportunities in this market over the short term, particularly international purchasers that can benefit from the currency arbitrage that has opened up by a weaker pound. ‘While the focus leading up to the Referendum has been on the UK's international trading relationships, we are deeply concerned that domestic politics will now be the key risk to the housing market. The UK has a deep housing supply imbalance and concerted attention from politicians to deliver credible, lasting solutions to the supply conundrum is desperately needed. Protracted infighting within the UK’s political parties will only harm the UK economy and any chance… Continue reading
