Residential property

What Brexit could mean for the Housebuilder Sector

In an already fragile housing marketing, the vote to leave the European Union in June 2016 has provided increased uncertainty for housebuilder businesses.

On the day of the referendum the share price of some of the major residential developers plummeted by almost 30% and whilst share prices have recovered in the intervening period, the lack of certainty around various key issues affecting the development community is undoubtedly continuing to cause concern.

In large part the uncertainty lies around what will happen to our economy as a whole and the impact of the decision on Scotland specifically.

At industry level however, perhaps the biggest direct impact is the significant risk of an impending labour and skills shortage. At the time of the vote 12% of British construction workers were of non UK origin (or 175,000 EU workers making up 8% of the sector’s workforce).

It’s acknowledged that part of the problem is that we haven’t trained enough home grown talent in recent decades and this aligned with our reliance on European workers has the potential to create the perfect storm. The industry is telling Government that if we don’t retain access to the single market after Brexit we could be at real risk of losing both skilled and unskilled foreign workers who will chose to relocate to other member states. The immigration issues they will face aligned with a falling pound will make it much more attractive for them to choose other European destinations in preference to the UK.

Another consideration is that whilst we use mainly domestic materials in construction we do import goods from Europe so the potential loss of freedom of movement of goods will also be a problem. If duties are levied or restrictions imposed on imports this will inevitably impact on costs and potentially delay projects.

Fixed price contracts are preferred within the industry so the combined risk of a falling pound, increasing material prices and a shortage of labour is going to be the challenge for both Government and industry in the months to come.

Tracey Hall

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