Never let it be said that we at Show House don’t know how to look on the bright side. Despite many industry heavyweights backing remain, and Winston Churchill himself declaring the best argument against democracy to be a five minute conversation with the average voter, the country has spoken and the housebuilding industry must build on new territory – a Britain outside the EU.
Sadiq Khan’s message was clear: “don’t panic”. To help us keep calm amid all the market turmoil, here are the 10 brightest scenarios predicted as a result of Brexit.
- Hacking through red tape
According to some developers, pesky EU regulations, such as the Habitats Directive, caused unnecessary holdups to development projects; after two years, EU regulations will no longer apply to the UK, freeing developers to battle Britain’s red tape instead.
- More foreign investment
Foreign investors are circling bargain developments as the pound crumples in the face of Brexit, bringing fresh capital to the, well, capital. With interest rates predicted to stay low, bargains will not stay on the shelf for long.
- A more competitive market
Yes, property prices are likely to take a hit. However, a more affordable property market will make it more attractive to a global market – and may help first time buyers onto the ladder.
- Short term demand from Europe
Now hear us out: freedom of movement applies for another two years. During this time, we can probably expect an influx of migration from Europeans eager to take advantage before the doors are closed for good. This means more demand for housing, stable rents and a continued appetite for UK property while the dust settles.
- A global workforce
We can safely agree that access to labour was housebuilders’ biggest concern over Brexit. The good news is there is talk of a points-based entry system similar to that of Australia. This means a talented architect from Argentina would have as much chance as entering the UK housebuilding industry as an eager bricklayer from Bulgaria. The UK housebuilding industry may have its pick of the world’s finest – as long as the UK makes them feel welcome.
- Safe as houses?
In periods of uncertainty, residential property has historically outperformed other asset classes. Even during the global financial crisis, UK house prices strongly outperformed the FTSE all-share index. Property has long been a safe haven for UK investors during periods of uncertainty. UK house prices grew considerably faster than UK equities during the last recession.
- Dampening demand
Demand will inevitably weaken, however some believe this will allow a normalisation in the industry as the supply and demand gap closes, resulting in a more stable market for the long term.
- Housebuilders may be able to lend again
The Mortgage Credit Directive stopped housebuilders from lending money to buyers, unless they register as a regulated Financial Adviser. In tough times, this has been a traditional way for housebuilders to help buyers overcome mortgage down-valuations and keep the market moving. In two years’ time, this should be the case again.
- Supply and demand
We still have a housing crisis. The UK’s long-term shortage of housing is not going anywhere in the short to mid-term, and neither is demand for new homes and conversions.
- Decision made
It is generally agreed that uncertainty is the Kryptonite of any market. Now we know Britain will be leaving the EU, the country will have to have to start looking forward once again.