t’s no surprise that Brexit had the biggest impact on the industry, with ‘uncertainty’ becoming the word of the year. Uncertainty over the outcome of Brexit negotiations and the survival of the current administration have disrupted both commercial and industrial investment. If we pair this with the stamp duty increase on properties over £1m, it is possible you will find the catalyst for the current housing crunch.
Such factors also started the ball rolling for the shift in investment from London to the North, with developers requiring cheaper land. This shift was emphasised last year by the benefits of buying outside the capital. Eight or 10 homes in the northern regions could cost a similar amount to just one home in London, and yet investors get capital growth and more homes in their portfolio to rent. For a long time, the feeling has been that London is the place to buy as that’s where the most money has been made. However, in 2017, this myth was dispelled.
We also saw buyers invest in areas of regeneration with improved transport infrastructure planned, and this was compounded by Philip Hammond’s announcement in the Autumn Budget for a £7bn expressway scheme for the Oxford-Cambridge corridor. The plan is for five new garden towns as well as new road and rail infrastructure1. While these sorts of mass developments are likely to attract investors, spending large amounts of Government money on such projects could be seen as a waste, with many other regions in desperate need of further investment.
Government figures show that in England over 200,000 homes have been sitting empty for at least six months2. This is likely due to buyers using these properties as investments for future growth, which unfortunately intensifies the housing problem. This problem only increases as more buyers wait to see whether transport links will be developed in the area. If such a project goes ahead, investors look to double or triple property value, simply because it improves commuting options.
Looking at the year ahead
Currently, we are seeing developers build multitudes of three-bed family homes, in a bid to solve the ever-evolving housing shortage. There has to be a shift this year to fit with demand, which will create more choice in the market, and respond to consumer need. Developers must start recognising this if they are to stay ahead of the game. This shouldn’t mean increased property prices, it should mean a welcome change.
There isn’t any doubt that technological advancements have already improved construction and we expect this to expand this year, through processes such as modular building and 3D printing. Expect more virtual reality and augmented reality use, with potential buyers visiting the shell of a virtual house, allowing them to design and configure a truly unique home. This will mean a fit-for-purpose property, which will hopefully result in purchasers staying in their homes for longer.
2018 must be the year we encourage entrepreneurialism and further innovation in the construction industry and because of this, we expect it to be the year of the SME builder.
It seems that Brexit will continue to be a real issue as the year progresses, particularly in terms of recruitment and careers. The UK’s departure from the EU has thrown the issue into sharper focus given the industry’s reliance on overseas labour3, meaning the drive to attract and retain talent has never been so vital.