How is the housing industry reacting to the Brexit vote?
The housing sector is key to the construction industry and forms of vital role in the government policy following its pledge to build a million new homes by 2020. We take a look at how the housing industry is reacting following the Brexit vote last week.
In the aftermath of the announcement that Britain had chosen to leave the European Union, house builders saw share prices plunge as far as 20% in some cases.
However, as the markets begin to settle following the initial nervousness of the morning after, the fact remains that there is still a huge demand for housing and a chronic shortage to satisfy it.
David Orr, Chief Executive at the National Housing Federation echoed this sentiment. He said: “We recognise the uncertainty that this result will bring to the sector and we are working with our housing association members to support them to continue delivering the homes and services this country needs. Whatever happens there is still a housing crisis and we remain committed to ending it.”
Leading housing developer Redrow Homes reported that Brexit hadn’t had any impact on business so far. Following strong end of the financial year trading figures, Chairman Steve Morgan commented: “Initial feedback is that sites remain busy, reservations continue to be taken and, indeed, we witnessed long queues and strong reservations at new sites launched last weekend.
“The fact remains that there is a long term underlying demand for new homes following decades of under supply. This chronic shortage of housing leaves market fundamentals unchanged.”
Chris Nelson, Co-Founder of sustainable housing developer, egg Homes, told UK Construction Online that he expected that market jitters should quickly pass: “Being honest, I would have preferred to stay within the EU as it is good for trade across member states and it would have avoided this period of uncertainty we’re heading in to. There is now an immediate financial impact, across all sectors of the Construction industry and on the residential sales side, however, I think the dust will settle quite quickly, there is a knee jerk reaction from the markets, but this shouldn’t last long.
Once new trade deals and agreements are put in place with individual European countries, which will happen very quickly, Europe exports to the UK more than we export, therefore they will be keen to set up new agreements quickly things should go back to normal and we could even be in a stronger position, but the immediate impact is as we expected. From an egg Homes perspective we source the majority of our materials and workforce from as close to site as possible, with only a few specialist materials sourced from overseas.
“As a business we’re also governed by the World Trade Organisation, which operates in a similar manner to the EU, so from a business perspective we’re in a fairly strong position. House prices may suffer, but I do not see this as a long term problem, and we are priced well for the markets.”
Investment in student accommodation was worth an estimated £4.5Bn last year and sees around 6% of all full-time students in the UK come from the European Union.
Empiric Student Property, specialist investors in premium student accommodation, predicted no long-term effects to the sector following the vote in their trading update ahead of the financial year-end.
In a statement the Company said: We believe that the impact on the operations of the Group will be limited. EU students represent only 6% of all full-time students in the UK, due primarily to the historical cap on the number of EU (including UK) students, as well the higher overall cost of studying in the UK (albeit subsidised) compared to continental Europe. Therefore, the UK’s higher education system is not dependent on this portion of the market.
While students from the EU may be subject more stringent visa requirements and higher fees, there is strong demand from other international students and the potential long-term devaluation of Sterling would make the UK more affordable for international students. There is also a significant increase in expectations of an interest rate fall, which would be to our benefit. Therefore, we believe that the higher education sector and, by implication, the student accommodation sector will prove resilient.”
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