How will Brexit affect the housing market?
With political events in the UK moving at alarming speed, commentators are still speculating on what leaving Europe may mean for the housing market and construction industry.
Early indicators are that where jobs are heavily dependent on EU funding and have seen a modest decrease in property value, it is difficult to see the immediate impact on the housing market in a meaningful way. However, it is clear that there is a lack in confidence in the area of housebuilding and this has affected the price of shares in major housebuilders, which have fallen since pre referendum highs and not yet recovered.
Other concerns have been that, in a sector that is already short on skilled labour, the disincentive for migrant labour could affect this further. Some economists, however, have suggested that EU immigration could temporarily rise before the new restrictions come into place.
Brian Berry, the Chief Executive of the Federation of Master Builders said: “The UK Construction Industry has been heavily reliant on migrant works from Europe for decades now – at present, 12% of British construction workers are of non-UK origin. It is now the Government’s responsibility to ensure that the free-flowing tap of migrant workers from Europe is not turned off. At the same time, we need to train more Construction Apprentices so that we are not overly reliant on migrant workers from Europe or further afield”.
The British Property Federation has already called on the UK Government to consider policy measures to support real estate in the commercial sector.In relation to residential housing development, they have suggested the introduction of a range of tax reliefs for Build to Rent developments, including the Community Infrastructure Levy (CIL) relief, relief for modular construction and conditional stamp duty relief for new build to rent developments.
Housing Associations also have concerns about the impact of the referendum. 23 of them have had their AAA ratings downgraded following the Rating Agency’s decision to downgrade the sovereign rating, and the concerns regarding a potential fall in house prices and tighter lending conditions will also be felt in this sector.
The UK construction industry as a whole need to consider the measures that they feel would best support their continued growth and development and lobby their member of parliament to make their views heard as the Brexit negotiations continue to move forward.
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