Brexit Briefing: The Impact

on Residential Development

The Impact on Residential Development
The Impact on Residential Development

21 July 2016, by Susan Emmett

The housing market remains undersupplied. We need to build around 300,000 new homes a year

Summary

Long-term demand: low levels of house building have resulted in a market that is fundamentally undersupplied. The housing crisis is a long-term structural issue which is not limited to population growth alone. Even with substantial falls in net migration, we will still require around 300,000 new homes a year.

 

Short-term sentiment: having a new prime minister quells some uncertainty but sentiment will still fluctuate as negotiations to leave the EU proceed. We expect to see lower transaction volumes and weaker house price growth in the near-term.

London: we have seen steady sales of prime new homes with some renegotiations of between 5% and 10% off the agreed price. New build sales rates have been slowing for the past 18 months with greater reliance on take up by PRS operators. However, the fall in sterling has prompted more interest from overseas buyers.

Outside London: since the vote, sales are marginally down but pricing has held firm with little evidence of developers offering discounts.

Development finance: the availability of development finance could be at risk. Government must be ready to unlock this potential barrier to maintain momentum in housing delivery.

Government policy: house building will play a significant part in the new Government's wider economic strategy. To maintain housing delivery, we need: the continuation of schemes such as Help to Buy, help with development finance, more planning consent in areas of high housing demand and policy flexibility surrounding affordable housing tenure.

Articles from 'Brexit Briefing: The Impact on Residential Development'

The Impact on Residential Development

Brexit will not solve the housing crisis. Policy flexibility and Government support is crucial

 
 

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Key contacts

Lucian Cook

Lucian Cook

Director
Residential Research

Savills Margaret Street

+44 (0) 20 7016 3837

 

Jim Ward

Jim Ward

Director
Residential Research and Consultancy

Savills Margaret Street

+44 (0) 20 7409 8841

 

Susan Emmett

Susan Emmett

Director
Residential Research

Savills Margaret Street

+44 (0) 203 107 5460

 

Lucy Greenwood

Lucy Greenwood

Associate
Residential Research and Consultancy

Savills Margaret Street

+44 (0) 20 7016 3882