It was somewhat of a surprise to see that the housing market coped reasonably well in the upheaval directly following the EU referendum. But as we are still in a period of uncertainty, will it continue to prosper even if at a slower rate? Many believe the property market will continue to grow, if, for no other reason, there are just not enough properties to go around.
There is concern that the UK will not be able to meet its quota of new builds, if it experiences a ‘hard Brexit’. Already there is a severe shortage of new housing in Britain, which has continued to bolster up house prices, as a continuous stream of people seek to purchase or rent suitable accommodation.
If England loses its rights to the single market by leaving, then proposed restrictions could come into play concerning immigration. These may lead to significantly reduced numbers of labour, entering the construction industry from abroad. This concern was voiced to the Conservative Conference in Birmingham by a respected economist Kay Daniel Neufeld from the Centre for Economics and Business Research.
In the region of 9% of building workers come from the EU, but in London, which is in the eye of the housing crisis, this number is more like one in three workers.
There is some ambiguity because fewer immigrants will at the same time also lighten the demand on property. However, with the shortage already a major problem the situation is likely to get more difficult rather than easier, hence the opinion that house prices may reduce in the speed of increase, but are not likely to start coming down in the near future.
Figures by Rics, a key indicator of reactions in the housing market, point to 12% of surveyors suggesting house prices have risen rather than fell during August. It certainly looks like some degree of confidence is returning, and there are plenty of investors still willing to invest in UK property.
The Construction Industry Training Board is hoping that some 230,000 jobs in the building sector will be created during the next five years; most of these will be within the homebuilding sector. Last year some 142,390 homes were built in England and Wales, a 20% rise on the previous year. However, this is still below the required 250,000 new properties needed just to keep pace with demand.
This imbalance will continue to drive up prices and create affordability problems for particularly first-time purchasers. London and the south-east, are likely to be most affected by Brexit, as well as this year’s stamp duty changes. The Centre for Economics and Business Research predicts price growth to reach 6.9% as an average during this year.
This information is provided by Auction House London, which offers a professional auction service to property investors.
12pm on the 2nd June 2017
London Marriott Hotel Regents Park, 128 King Henry's Rd, London NW3 3ST