Opportunity and Uncertainty in 2018 Housebuilding Market

Opportunity and Uncertainty in 2018 Housebuilding Market

The new homes market in 2018 is set to benefit from the government’s focus on housing in the budget that was delivered towards the end of last year by Chancellor of the Exchequer Philip Hammond.

Possibly the most important announcement was that most first-time buyers will not have to pay Stamp Duty. This will give a significant boost to the ability of young people to get onto the ‘housing ladder’ and thus help to stimulate the market overall.

Mr Hammond’s promise of new money for the Home Builders Fund for small and medium sized housebuilders and a £630 million 'small sites' fund to help the delivery of 40,000 homes will also help. So, too, will his commitment to provide a total of at least £44 billion of capital funding, loans and guarantees to support the housing market over the next five years.

The tax changes and spending pledges in the budget aimed at boosting housebuilding and construction came alongside an announcement of the government’s industrial strategy which is also a significant move in the right direction.

I was delighted to see that many of the comments Larkfleet made on the draft of the industrial strategy were reflected in the final document. In particular, I welcome the focus on increasing productivity, the commitment to education and training in skills relevant to construction and other industries of the future, and the intention to increase the UK’s investment in research and development.

The selection of ‘clean growth’ low carbon technologies as one of four ‘grand challenges’ set out in the strategy is also welcome and very much in line with what we suggested to government.

But I was disappointed that some issues we raised in the consultation were not reflected in the strategy.

I remain deeply concerned about the impact of Brexit on the construction industry’s ability to recruit overseas labour to fuel future growth. However, in its whole 250-plus pages the strategy mentions immigration only once – specifically in relation to researchers and scientists. This is good but it does nothing for wider industry and commerce.

Interviewed live on BBC2 television during the channel’s coverage of the budget, I warned that Brexit was in danger of depriving the industry of the skilled workforce it needs to build new homes. Many EU nationals are leaving the UK and others are less willing to come.

Without action to tackle this issue there must be doubts about the ability of the construction industry to meet the government’s target of building 300,000 new homes every year by the mid-2020s.

However, the immediate future for the housing market looks good as long as consumer confidence holds up.

Happily, the uncertainty caused by the long-running Brexit negotiations seems to be felt more keenly in board rooms than in living rooms. Consumers are apparently largely unconcerned about what our changing relationship with the EU might mean. As long as that continues, the housing market will continue to grow from strength to strength.

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