Brexit comment on self-build and property sector

In light of the uncertain property market post Brexit, Michael Holmes, spokesperson for The London Homebuilding & Renovating Show (23-25 September, Excel, London, www.homebuildingshow.co.uk) provides commentary regarding the impact on the self-build and property sector.

What is the immediate impact of Brexit on the housebuilding sector?

This remains to be seen, but as long as there is a period of uncertainty, people are likely to put off making big decisions like house purchases or taking on a major self-build project or an extension. I suspect those with a project already underway, or very close to starting, will carry on with their plans regardless. The impact is not likely to be felt for a year or two, but until there is some clarity and visibility in terms of the direction in which the economy is going to go and the impact that Brexit will have on the wider economy – and therefore the housing market – I think there will be a pause while people put off major decisions.

What do you think is the long-term impact of Brexit on construction?

The impact will be immediate because a huge amount of British construction materials are imported from Europe, and purchased in Euros. The pound has already devalued post-Brexit, so materials are therefore going to cost more. If you then add in shipping costs, material prices will inevitably increase which will drive up construction costs. Labour costs will probably pause immediately if people put projects on hold and there is less demand for construction work. In the longer term, if there are strict rules on immigration which don’t allow skilled construction workers to come into this country, there will be less people available to build. This means that labour prices will increase until training programmes and apprenticeships are stepped up and we are able to train enough British workers to undertake the construction work that we need in the housebuilding sector.

What do you think is the impact on the custom and self-build sector?

In the short term, some people will wait to see what happens to the economy and the political direction of the country – certainly until we are given some idea of what Brexit Britain will look like. If it is a fairly minimal change then I suspect things will stabilise fairly quickly, as long as we also retain passporting for financial services.

What should self-builders who are mid-project do following the EU referendum results?

Those who see their home as somewhere to live – a long-term project and not a short-term investment- are carrying on as usual, and that would be my advice if you are considering a custom build, self-build or home improvement project. People with long-term projects are carrying on as usual. If you are looking to speculate and make a short-term gain, then you might pause to see how Brexit goes and look for more visibility on the direction of the economy and the housing market. Depending on how things pan out, house prices might stay flat or fall slightly and interest rates may have to increase to fight inflation. For those planning a project for a long-term home, I think short-term fluctuations in house prices are a secondary consideration, so having the right house should come first and foremost over any short-term gain.