How Brexit Affects the UK Construction Industry

In 2016, the UK voted by just under 52 percent to leave the EU. Since then, the increase in market volatility is clear for all to see. Let’s look closer at the effect on the construction industry.

How the Brexit Vote affects the British Economy

Analysis shows that the British deficit could be as much as £40 billion, and economists agree that damage to the British economy is a real risk. However, although some industries have already been negatively affected, the story is not the same across the whole economy. The attached infographic has more information.

Which Industries Has Brexit Hit Hardest?

A Lack of Affordable Housing

It’s nothing new that there is a lack of affordable housing in Britain. There is not enough supply to meet demand. Despite government efforts, some say that even more is needed.

As the prospect of owning your own home becomes less realistic, the number of people who rent their home has increased sharply. UK property prices are on the increase, and rental prices are climbing too. An average home costs eight times an average salary, but renting can cost as much as half a person’s salary, according to the Office for National Statistics. The rental market has increased 100 percent in the last two decades, and 20 percent of all homes are rented.

The government is pushing to get new homes built through a number of measures, including planning reforms. The attached PDF has more information about this.

The UK Government's Target of Building 3000,000 New Homes a Year

The Current Situation for the Construction Industry

Though the market has become volatile and some industries have suffered, there is no prospect of a decrease in the demand for new affordable housing any time soon, as Sahel Majali, founder and Chairman of the Mid Group, points out. In London especially, the demand for starter homes is great, with young families keen to get on the housing ladder.

According to the housing charity Shelter, there is a need for no less than 1.2 million new homes to meet this demand. The only other option for young families is the increasingly insecure rental market. Shelter says that losing a rented home is the most common cause of homelessness.

With this steadily increasing demand, and recurrent government commitments to build more homes over the next decade, there’s every reason for optimism in the construction sector. The Government has committed more money to house building, which is shown in the attached video. As Mr Majali points out, the housing crisis means there will be a demand for new homes for many years to come.