Like many in the development industry we were disappointed in the decision to leave the European Union due to the uncertainties it brings.
Of course, the reality is that we have not yet left the EU despite now knowing that Article 50 will be invoked by March 2017, giving an idea of the eventual timescales for Brexit. As a result, it is currently business as usual, and a number of well-publicised investment deals have given the market some hope that the world hasn’t forgotten about us. With Sterling remaining at a slightly lower rate the opportunities for foreign investment are actually, in many ways, increased.
It has even been recently reported that prospective foreign house buyers, scared away by the recent stamp duty hike, are returning to their traditional west London haunts, able to afford houses again due to devalued Sterling.
With major housebuilders’ shares amongst the worst hit in the immediate aftermath of the referendum, and the suspension of a number of property funds, there was some nervousness in the market. But, in our own experience, projects and disposals have continued broadly unaffected with only very minor tinkering with terms.
This is due to the underlying demand factors remaining stable. Employment levels are at near record highs, with population growth set to continue – in spite of any change to immigration policy. Despite international migration featuring heavily in the Brexit debate a number of specialist demographers such as Barton Willmore have suggested that housing need is not going to ease and the undersupply that has accrued over many years means that the fundamentals for house building and strategic land are strong.
As a result, housing demand remains high, and price growth has increased, albeit a tad slower than previous years – falling to 8.3% year on year. Like any market change the reason for this slight fall is difficult to predict, was it Brexit or merely the market beginning to correct itself after record price growth over a number of years?
Here at Richborough we will continue to keep our finger on the pulse as the Brexit situation develops.