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What Does the Future Hold?

11/07/17
Posted by: Tom Morris

What does the future hold?

With the events of the past 3 months, what future does the house building industry now have?

The snap election and the changing face of UK politics has the potential to stagnate the house building industry, as various parties and quangos bicker over what is the best way forward for the industry.

No one disagrees that the country needs to be building more new homes, but there is a disparity in how this is achieved and what role the private and public sector will play in this.

The lack of a majority single government means that deals will have to be brokered and money spent in unexpected arenas as compromise agreements are made. I worry that funds for housing investment will be spent elsewhere and the strategy around direction will be watered down. Critically, the political will to change the bureaucratic nature of the planning process will take a back seat as more immediate and higher political gain decisions are made.

Whilst housing is a very important political hot potato, it does not win you immediate political good will. In addition, with the rise of Jeremy Corbyn being built around populist policy pledges, I feel that the temptation for the other main parties to follow suit will be to great. The Conservatives policies and general government will become focused on short term goals, whereas housing policy and planning is a medium to longer term decision so is unlikely to fair well in the new policy environment.

The horrendous impact of the Grenfell Tower fire will stay with us all forever and as a result, there will be many changes for the property industry. These changes could lead to higher costs and longer build times, most likely driven by increased regulation and bureaucracy. Clearly, safety is priority and any changes to ensure this need to happen immediately, but this may not be clear as politicians try to score points.

Lastly, we have the spectre of Brexit and how this will pan out. At this stage, so much is unclear and we do not know how the investment markets and wider business world will react to whatever course we take.

From what seemed such a golden opportunity to bring stability and clear strategy to the residential property industry, we are now faced with a very uncertain world where we are expected to increase new homes output to between 225,000 – 275,000 (1) more homes per year from the current latest figures that show between March 2016 – March 2017 we only completed 147,960 (2) homes.

How can this be possible when the government policy isn’t clear or whether it will be able to be implemented?

It is a very interesting time, with a very unclear and uncertain future but in the new world of political point scoring, we can be sure of one thing - the housing industry is likely to be blamed in some capacity for not hitting targets.

 

1 DCLG House Building; new build dwellings, England: March Quarter 2017 (Link)

2 DCLG Fixing our broken housing market (Link)