In the arguments for and against, what are the facts for property investors?
There is nothing that spooks markets more than uncertainty. Our previous general elections are testament to that and, as the vote on whether Britain should leave the EU is imminent, we are already feeling the ripple of anxiety amongst our property elite.
How could a Brexit vote affect our property market?
There are many arguments for and against Brexit - with leading economists using mind boggling equations, the likes of which you may have only seen in the 1997 film Good Will Hunting to argue their case.
However, for the purposes of this blog I want to focus on one key impact Brexit will have on our construction labour market and what that will mean for our already beleaguered housing stock.
In 2007 the labour government set a target for 240,000 homes to be built every year up to 2016 to keep up with demand, but guess what... we are nowhere near that! There are many reasons as to why these targets were never achieved: slow,bureaucratic, planning departments, lack of available land, even running out of bricks in 2013/14.
However, a major factor that affected - and still affects - the speed at which houses could be built was the shortage of skilled labour.
Where are all the brickies?
Blair’s obsession with “going to Uni” has had a real impact on the supply of skilled tradesmen our construction firms need, to keep up with demand. The Mid noughties saw some 450,000 undergraduates enroll on university courses, regardless of quality. This was more than two-and-a-half times the 175,000 individuals who started an apprenticeship in the same period.
According to the Federation of Master Builders, 66% of small to medium sized construction firms have had to turn down work because they didn’t have the available staff to carry it out.
If Junes vote means we leave the EU, what will happen to the current supply of subcontractors employed in our construction industry from Eastern Europe? Around 50% of our subbies are Eastern European and are currently aiding our attempt at sustaining a fragile housing market.
But that’s not all: as speculation around Junes vote is rife, it seems foreign investment in our London housing market is already starting to wane.
As many investors want to sit tight to see how the markets adapt regardless of which way the vote goes, investment in new builds will almost definitely be hampered, resulting in another obstacle in the already restricted UK housing supply.
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