The weather today will be mild, sunny with a chance of rain but feel cold in some areas.
This is the typical weather report for the UK. Mixed, changeable and unpredictable. A fitting description too for the current spate of new year forecasting for the Housing sector. The current uncertainty surrounding Brexit and various government promises to solving the housing crisis has meant that predictions for 2019 are variable - to put it mildly.
Yet, here at Kingsley Recruitment, we believe the reality is much more positive.
Brexit, Brexit, Brexit
It’s all over the news, all the time, but the headlines change every day. Yes, it is having an impact, but the view from our clients within the Residential & Housing sector is that it is still business as usual, albeit with an eye on contingency planning.
I would say things seem ok, as you long as you don’t read any newspapers!
At the start of December, the outlook was moderate with estimates ranging from no growth to a standstill, to a fall. The Royal Institution of Chartered Surveyors (RICS) (1) has said in its latest report that house prices will fall, as will the number of houses being put on the market. The main reason: Brexit.
If you are searching for assurance and a consensus of opinion then you will be hard-pressed to find it. The predictions vary wildly. Partly because of the uncertain political climate and partly because of the huge differentiation between housing markets in the regions. Scotland is up, but London is down.
These predictions will continue to change as the wheels of news keep on rolling.
In the meantime, whether Brexit goes smoothly, badly or is delayed - the country is still moving on.
This too seems set to slow down due to a combination of the increasing costs of materials, labour shortages and investment. However, Shelter’s cross-party Housing Commission report (2) has recently called on the government to fund a 20-year programme to deliver 3.1 million more social homes.
“Our ambitious £9bn affordable homes programme will deliver 250,000 homes by 2022, including homes for social rent. A further £2bn of long term funding has already been committed beyond that as part of a ten year home building programme through to 2028. We’re also giving councils extra freedom to build the social homes their communities need and expect.”
Communities Secretary, James Brokenshire, quoted in The Independent, 8 January 2019 (3)
“Our vision for social housing presents a vital political opportunity to reverse this decay. It offers the chance of a stable home to millions of people, providing much-needed security and a step up for young families trying to get on in life and save for their future.”
Co-author of the report, Baroness Sayeeda Warsi, quoted in Shelter Report, 14 January 2019.
If the government sign up to it, this programme would be a massive boost for house building across the country.
Lenders are expected to cut their rates on fixed-rate mortgages. If there is a no-deal Brexit the Bank of England will be likely to cut its bank rates even further.
Private Rental Sector
Within PRS, the outlook is sunny. Investment in PRS and commitment to build has soared in the last year with around 80,000 PRS homes planned by 2022 - at a value of around £70bn (4). Some major build to rent and PRS schemes have been signed in the last year alone.
The number of people making up Generation Rent is set to rise - especially since bold designs and new thinking on communal spaces are making renting spaces increasingly attractive. Developers are also looking at future proofing their developments with integrated smart-tech, 5G enabled spaces and provision for autonomous vehicles.
Massive investment is needed to help keep the private rental sector topped up. But forecasters are hoping that global investment may still be interested in the UK, post-Brexit.
Richard Watkins, director of Aston Mead Land & Planning “Despite the risks involved in the current challenging market conditions, we expect that come April 2019, those hoping to trade up will find that the gap in sale values and onward purchase prices will be the narrowest it has been for half a decade.”(5)
Greater Manchester Spatial Framework
The GMSF was released on the 14th January which is a 20-year masterplan looking to reconfigure green belt development, house building targets, social housing plans and transport links across the region.
Although some Land Directors are sceptical about what it promises to deliver, considering the plan to be too conservative. The numbers of houses planned is quite low and the new plan has revised the number of houses to be delivered even further from 227,000 to 201,000. Sites will start to be released in 2021 but it is likely to take a further 3 years after that until projects are delivered.
Recruitment in Residential & Housing
Eleven to twelve years on from ‘the crash’ the gut feeling isn’t as strong this time, however, some housebuilders are feeling that there will be a ‘dip’ this year, a dip in sales mirrored by a dip in new homes being built.
The view is different when it comes to recruitment. We are seeing an increase in recruitment activity within the North West and with our clients. Within the House Building and Housing Association marketplace, Kingsley Recruitment is experiencing their busiest start to a year to date.
Growth is the word and sustainable growth is the approach.
In summary: with career opportunities across all disciplines, but especially within land and partnerships, it is interesting to see that whilst our clients anticipate a dip this year, their plans for the longer term remain positive and strong. Brexit is the common denominator, but in my opinion, it isn’t Brexit itself, more so the uncertainty of the current atmosphere around it. Once we know what we are dealing with the sector will crack on and make it happen.
Purchaser confidence in the first/second-time buyer market remains positive and active, it’s the purchasers who lost equity in the last recession, those who don’t need to move but may ‘like’ to move that are the nervous ones.
The ongoing demand for housing across the country will not change, it won’t end with a ‘deal or no deal’ Brexit, but at least everyone will know how to proceed.
In the meantime, the view from here is that the recruitment sector within residential development is still buoyant.
If you are planning to grow your team in 2019 or looking for a new opportunity and would like some confidential and practical advice, please contact Mark Noakes on email@example.com / 0161 393 9889.
Mark Noakes and Kingsley Recruitment Director, Andrew Kingsley will also be attending the Insider North West Residential Property Awards on 24 January.
(1) “Housebuilders’ costs rising steadily’, RICS, 2 January 2019 <https://www.rics.org/uk/news-insight/latest-news/news-opinion/housebuilders-costs-rising-steadily/> [accessed 16 January 2019].
(2) “Shelter Report: RICS backs findings as starting point’, RICS, 8 January 2019 < https://www.rics.org/uk/news-insight/latest-news/press-releases/shelter-report/> [accessed 16 January 2019].
(3) May Bulman, ‘Government needs to build three million social homes to solve housing crisis, finds landmark review’, The Independent, 8 January 2019, <https://www.independent.co.uk/news/uk/home-news/social-housing-how-many-new-houses-homes-crisis-shelter-report-homelessness-a8715541.html> [accessed 18 January 2019].
(5) Kaylene Isherwood, ‘Property Market predictions for 2019’, Buy Association UK, 3 December 2018 <https://www.buyassociation.co.uk/2018/12/03/property-market-predictions-for-2019-resilience-and-technology-will-be-key/> [accessed 16 January 2019].